Quiz 1: Market Structures
1.
What are the characteristics of a perfectly competitive market? a) Many buyers and many sellers, identical products, free entry and exit b) Few buyers and many sellers, differentiated products, barriers to entry c) One buyer and many sellers, differentiated products, regulated
prices d) Many buyers and one seller, identical products, government-
controlled prices
2.
Describe the profit-maximizing output level for a perfectly competitive firm in the short run. a) Where marginal revenue equals marginal cost b) Where average total cost equals marginal revenue c) Where marginal cost equals average total cost d) Where average revenue equals average total cost
3.
What is a monopoly? a) A market structure with many buyers and many sellers b) A market structure with one buyer and many sellers c) A market structure with many buyers and one seller d) A market structure with few buyers and few sellers
4.
How does a monopoly differ from perfect competition? a) Monopolies have many buyers and many sellers, while perfect competition has one
buyer and many sellers b) Monopolies produce homogeneous products,
while perfect competition produces differentiated products c) Monopolies have barriers to entry, while perfect competition has free entry and exit d) Monopolies have regulated prices, while perfect competition has prices determined by supply and demand
5.
What is price discrimination, and why do monopolies engage in it? a) Price discrimination is charging different prices to different customers based on their willingness to pay, to increase profits b) Price discrimination is charging the same price to all customers, to maximize
consumer surplus c) Price discrimination is illegal for monopolies, as it violates antitrust laws d) Price discrimination is charging a single price to all customers, regardless of their willingness to pay
6.
Explain how monopolistic competition differs from perfect competition and monopoly. a) Monopolistic competition has many buyers and one seller, while perfect competition has one buyer and many sellers b) Monopolistic competition has few buyers and many sellers, while perfect competition has many buyers and many sellers c) Monopolistic competition has differentiated products and free entry and exit, while perfect competition has identical products and barriers to entry d) Monopolistic competition has regulated prices, while perfect competition has prices determined by supply and demand
7.
What is an oligopoly? a) A market structure with many buyers and many sellers, differentiated products, and barriers to entry b) A market
structure with few buyers and many sellers, identical products, and regulated prices c) A market structure with many buyers and few sellers, differentiated products, and barriers to entry d) A market structure with few buyers and few sellers, identical products, and free entry and exit
