Market Structure Quiz

Which is NOT a characteristic of a monopoly?

• Seller sets the market price
• Entry into the market is easy
• Firm sells a unique product
• One seller

Perfect competition involves:

• Sellers working together to set prices
• A large number of buyers & sellers
• Difficulty entering & exiting the market
• Little information is available to buyers

What were the three types of economies of scale mentioned in the YouTube video on economies of scale?

• Oligopoly, Monopoly, & Perfect Competition
• Land, Labor, & Capital
• Purchasing, Specialization, & Technical
• Specialization, Barriers to Entry, & Technical

The market for milk is an example of perfect competition. Why?

• Sellers offer a nearly identical product
• Anyone can start a dairy farm or leave the dairy business at any time
• Many people buy and sell milk
• All of the above

The town of Utopia has three gas stations. The owners of these gas stations make decisions together about when to raise and lower gas prices. It would be difficult for another gas station to enter this market. Which market structure best describes the market for gas in Utopia?

• Perfect competition
• Monopolistic competition
• Oligopoly
• Monopoly

A new firm recently arrived in Utopia offering much higher internet speeds than existing providers. The other providers have gone out of business because so many Utopian residents have switched to the new provider. What will most likely happen to the price of internet service in Utopia?

• The price will decrease because the new provider wants to keep its customers happy.
• The price will increase because there is only one internet provider in Utopia.
• The price will decrease because there is only internet provider in Utopia.
• There will be no change in price.

List the four market structures in order from least competitive to most competitive.

• Oligopoly, Monopoly, Perfect Competition, Monopolistic Competition
• Perfect Competition, Oligopoly, Monopoly, Monopolistic Competition
• Monopoly, Oligopoly, Monopolistic Competition, Perfect Competition
• Monopoly, Monopolistic Competition, Perfect Competition, Oligopoly

If a major car company such as Ford lowers their prices, what are other car companies likely to do?

• Raise their prices
• Go out of business
• Maintain their current prices
• Lower their prices

Which of the following statements is true?

• Monopolistic competitors have an incentive to differentiate their products so customers have choices, but monopolies do not have this incentive.
• Monopolistic competitors & monopolies have the same amount of influence over the price of their products.
• Both oligopolies & industries with monopolistic competition involve a large number of sellers.
• All industries fit neatly into one type of market structure.

Why does the government regulate natural monopolies?

• To increase competition in the market
• To prevent the monopoly from charging excessively high prices
• To ensure the monopoly provides an adequate, high-quality amount of the product
• All of the above are possible reasons for regulation