Market Structures Test

What is perfect competition?

• A market where buyers and sellers have perfect knowledge

• A market with limited knowledge

• A market with no competition

• A market with monopolistic practices.

Pure competition is important because economists use it to measure other

• market structures.

• people's income.

• daily economic activity in Europe.

Monopolistic competitors rely on _______ and product differentiation to make their products stand out.

• nonprice competition

• price wars

• cost-cutting measures

• government subsidies

What is an oligopoly?

• A market structure with a small number of firms dominating the market

• A market structure with a single seller

• A market structure with many buyers and sellers

• A market structure with no competition

In an oligopoly, if one company reduces prices or offers a promotion, what do others in the industry do?

• Others in the industry may also reduce prices or offer promotions in response to maintain their market share.

• Others in the industry will ignore the price change and continue with their current strategy.

• Others in the industry will increase their prices to differentiate their products.

• Others in the industry will exit the market to avoid competition.

How do oligopolists compete on a nonprice basis?

• Through product differentiation and advertising

• By lowering prices below competitors

• By forming cartels to control prices

• By increasing production to flood the market

What is a monopoly?

• A) A market with many sellers

• B) Opposite of pure competition; only one seller of a particular product

• C) A market with no sellers

• D) A market with only buyers.

monopoly based on the absence of other sellers in a certain geographic area.

• technological monopoly

• government monopoly

• geographic monopoly

• natural monopoly

a single firm can produce the product more cheaply than several competing firms could.

• technological monopoly

• government monopoly

• geographic monopoly

• natural monopoly

monopoly owned and operated by the government.

• technological monopoly

• government monopoly

• geographic monopoly

• natural monopoly