Market Structures Quiz

A characteristic of a monopoly is:

• Many sellers

• Free entry and exit

• One seller

• Identical products

• Perfect information

What gives a monopolist the ability to set prices?

• Price-taking behavior

• Barriers to entry

• Perfect substitutes

• Infinite demand

• Government price control

In the short run, a monopolist maximizes profit when:

• MC = ATC

• MR = MC

• P = MC

• AVC = MC

• TR = TC

A monopolist charges a higher price than a competitive firm because:

• It faces elastic demand

• It maximizes output

• It restricts quantity to raise price

• It earns zero economic profit

• It faces perfect information

In monopolistic competition, firms sell:

• Identical products

• Differentiated products

• No products

• Unlimited products

• Homogeneous services

In long-run equilibrium, a monopolistically competitive firm:

• Earns supernormal profit

• Faces constant returns

• Earns zero economic profit

• Has MC = ATC

• Faces kinked demand

What is a feature of oligopoly?

• Price-taking firms

• Many sellers

• Strategic interdependence

• No entry barriers

• No product differentiation

Collusion in oligopoly leads to:

• More efficiency

• Higher output

• Higher prices and lower output

• Greater consumer surplus

• Zero economic profits

Why do monopolies result in deadweight loss?

• They overproduce

• They set P = MC

• They produce less than socially optimal quantity

• They reduce average cost

• They increase innovation

A dominant strategy in oligopoly is:

• Always collude

• Ignore prices

• Best strategy regardless of rivals' actions

• Fixed cost minimization

• Zero output production