Econ Unit 7 Test 24

What is a key characteristic of a perfectly competitive market?

• Few sellers
• Unique products
• Identical products
• High prices

Which of the following is NOT a condition of perfect competition?

• Many buyers and sellers
• Identical products
• Control over market price
• Free market entry and exit

Why are perfectly competitive markets considered efficient?

• They have high start-up costs
• Prices reflect opportunity costs
• Firms have market control
• Technology barriers exist

What can cause imperfect competition?

• Identical products
• Many buyers
• Barriers to entry
• Informed sellers

What is the effect of high start-up costs on market entry?

• Easier for new firms to enter
• No effect on market entry
• More difficult for new firms to enter
• Reduces competition

In a perfectly competitive market, what happens when a product is very popular?

• Firms exit the market
• Prices increase significantly
• New firms enter the market
• Demand decreases

Which of the following is a commodity in a perfectly competitive market?

• Designer clothing
• Custom furniture
• Low-grade gasoline
• Brand-name electronics

In perfect competition, how are prices determined?

• By individual firms
• Through government regulation
• By market equilibrium
• Through technological barriers

What type of product is assumed in a perfectly competitive market?

• Differentiated products
• Custom products
• Identical products
• Luxury products

How do informed buyers and sellers contribute to perfect competition?

• They create barriers to entry
• They lead to price stability
• They limit market entry
• They cause price fluctuations