Chapter 1.5, 1.6, 1.7

What is a market?

• A place where only sellers trade goods

• A government-controlled platform for exchanges

• A platform where buyers and sellers interact to trade goods or services

• A place where prices are fixed by law

Market prices are determined by:

• Government regulations

• The interaction between buyers and sellers

• The number of employees in a business

• Fixed costs of production

Which of the following is a characteristic of perfect competition?

• Few large sellers

• No barriers to entry or exit

• Differentiated products

• High market power

In a monopolistic competition market, firms rely heavily on:

• Homogeneous products

• Government price setting

• Branding and advertising

• Complete lack of competition

What is a key feature of an oligopoly?

• No barriers to entry

• Many small firms with identical products

• A single dominant seller

• Few large sellers dominating the market

Which market structure has the highest barriers to entry?

• Perfect competition

• Monopolistic competition

• Oligopoly

• Monopoly

In a perfectly competitive market, firms are:

• Price makers

• Price takers

• Regulators of supply

• The only source of information

Consumer sovereignty means:

• Governments dictate production

• Consumers determine what is produced based on their choices

• Firms set prices based on their costs

• The most powerful company controls the market

How do competitive markets improve efficiency?

• By eliminating all small businesses

• By encouraging cost-cutting and technological innovation

• By increasing government control over industries

• By limiting the number of firms in a market

Which of the following is a benefit of strong market competition?

• Higher prices for all goods

• Reduced consumer choice

• Improved product quality

• More government intervention