Market Structure Quiz

In a perfectly competitive market, the marginal revenue curve:

• Slopes downward.

• Coincides with the demand curve.

• Lies below the demand curve.

• Is vertical.

In the long run, firms in a perfectly competitive market earn:

• Economic profits.

• Accounting profits.

• Zero economic profit.

• Negative profits.

Which of the following is a necessary condition for perfect competition?

• Differentiated products.

• Barriers to entry.

• Price-making firms.

• Free entry and exit.

A monopoly is characterized by:

• Many sellers and one buyer.

• One seller and no close substitutes.

• Many sellers producing identical products.

• One seller with perfect substitutes.

A monopolist's marginal revenue is:

• Equal to price.

• Higher than price.

• Less than price.

• Independent of price.

Which of the following represents a source of monopoly power?

• Free entry and exit.

• Perfect information.

• Economies of scale.

• Many substitutes.

In a monopolistically competitive market, firms:

• Produce homogeneous products.

• Are price takers.

• Face a downward-sloping demand curve.

• Earn long-run economic profits.

Excess capacity in monopolistic competition occurs because:

• Firms produce at a level of output below the minimum of average total cost.

• Firms collude to restrict output.

• Firms operate where price equals marginal cost.

• Firms produce at the efficient scale.

In the long run, monopolistically competitive firms earn zero economic profit because:

• Demand becomes perfectly elastic.

• New firms enter the market, shifting the demand curve leftward.

• Firms collude to restrict entry.

• Costs decrease with increased output.

The primary characteristic of an oligopoly is:

• A large number of firms.

• Homogeneous products.

• Interdependence among firms.

• Free entry and exit.