AP Micro Imperfect Competition 4.1 - 4.3

Front

Which of the following best describes characteristics of imperfect competition? Identical products, no barriers to entry, price takers; Differentiated products, some market control, barriers to entry; Perfect knowledge, infinite buyers and sellers, free entry and exit; Standardized goods, zero economic profit in the long run, identical products

Back

Differentiated products, some market control, barriers to entry

Front

Which of the following is NOT considered a common barrier to entry? High startup costs, Patents or legal restrictions, Perfect information among consumers, Established brand loyalty by existing firms

Back

Perfect information among consumers

Front

Which of the following is a valid distinction between perfect and imperfect competition? Perfect competition has no barriers to entry; imperfect competition has many barriers to entry., Perfect competition involves differentiated products; imperfect competition involves homogeneous products., Firms in perfect competition are price makers, while firms in imperfect competition are price takers., Perfect competition results in long-term economic profits, while imperfect competition does not.

Back

Perfect competition has no barriers to entry; imperfect competition has many barriers to entry.

Front

Which statement accurately identifies a similarity between perfect and imperfect competition? Options: Both result in allocative efficiency in the long run., Both produce significant deadweight loss in the long run., Both feature price-making firms that can control market outcomes., Both allow firms to earn economic profits in the short run.

Back

Both allow firms to earn economic profits in the short run.

Front

Which of the following statements about monopolies is FALSE?
- All monopolies make a profit.
- Monopolies can be efficient under certain circumstances.
- Monopolies may exist legally if they result from patents or innovation.
- A monopoly typically controls more than 40% of the market share in its industry.

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All monopolies make a profit.

Front

Why does marginal revenue (MR) fall below demand in a monopoly?

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Monopolies must lower the price to sell additional units, reducing MR.

Front

What is one way a monopoly can be GOOD for the economy?

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They operate at economies of scale, lowering production costs, making it impractical to have many firms.

Front

Where does a monopoly determine its profit-maximizing output?

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At the point where marginal revenue (MR) equals marginal cost (MC)

Front

What is the primary reason monopolies are considered inefficient?

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They underproduce relative to socially optimal levels, creating deadweight loss.

Front

Which graph represents a monopoly?

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