Preliminary Economics: Topic 3 Quiz: Markets

What is monopolistic competition

• A theoretical model of perfect competition

• Many small firms in the industry

• A small number of larger firms that dominate the industry

• Only one producer in the market

Which of the following is not a characteristic of a purely competitive market

• Products sold are identical across all firms

• There are no barriers to entry or exit the market

• Buyers have full knowledge of prices offered in the market

• Firms can influence the market price through advertising

Which of the following is least likely to affect the market equilibrium price and quantity in a purely competitive market?

• A sudden change in consumer preferences

• An increase in the number of sellers in the market

• A government-imposed price ceiling

• A firm's individual advertising campaign

What is meant by the price mechanism?

• The government must intervene when the cost of a good or service becomes too great or too little.

• When a market has perfect competition.

• The forces of supply and demand, which determine the prices at which goods and services will be bought and sold in the market.

• The supply and demand curve are in equilibrium.

What is a monopolistic competition?

• A few large firms are in control over the market such as Woolworths or Qantas

• Many small firms that have healthy competition in the market such as restaurants

• A few small firms that are in control over the market

• One firm that controls the whole market

An expansion in supply occurs when price increases from P1 to P3. This causes the quantity supplied to rise from Q1 to Q?

• Q1

• Q2

• Q3

• Q4

A perfectly elastic supply graph is a line directly

• Vertical

• Horizontal

• Diagonal

• None of the above

A perfectly inelastic supply graph is a line directly

• Vertical

• Horizontal

• Diagonal

• None of the above

What would cause an expansion in supply? Consider ceteris paribus.

• Increase in demand

• Increase in price

• Decrease in demand

• Decrease in price

Select the option that wouldn’t cause a shift in the supply curve for apples.

• New technology makes growing apples faster

• A natural disaster impacts the supplier's ability to supply.

• Mangos drop in price

• Apples increase in price