Market Structures: Perfect Competition, Monopoly, Oligopoly, and Monopolistic Competition

Question 1

Which of the following is NOT an advantage commonly associated with an oligopoly market structure?

Accepted Answer

High barriers to entry

Answer

Economies of scale

Answer

Product differentiation

Answer

Increased innovation

Question 2

A government-imposed price ceiling set below the equilibrium price will result in:

Accepted Answer

Excess demand

Answer

Surplus

Answer

Increased producer profits

Answer

Lower consumer prices

Question 3

In a perfectly competitive market, a decrease in demand for a product will typically lead to:

Accepted Answer

Lower price and quantity

Answer

Higher price and lower quantity

Answer

Lower price and higher quantity

Answer

Higher price and quantity

Question 4

Which of the following is NOT a commonly recognized barrier to entry?

Accepted Answer

Perfect information

Answer

Economies of scale

Answer

Patents

Answer

Network effects

Question 5

Which of the following is a feature of a monopolistic market structure?

Accepted Answer

One dominant firm

Answer

Many small firms

Answer

Identical products

Answer

Low barriers to entry

Question 6

In an oligopolistic market:

Accepted Answer

A few large firms dominate the industry

Answer

Firms have no control over the market price

Answer

There are many small firms competing in the market

Answer

Products are highly differentiated

Question 7

In a perfectly competitive market, the demand curve facing an individual firm is:

Accepted Answer

Horizontal

Answer

Downward-sloping

Answer

Upward-sloping

Answer

Vertical

Question 8

A market characterized by economies of scale and high barriers to entry is likely to be:

Accepted Answer

Monopolistic

Answer

Perfectly competitive

Answer

Oligopolistic

Answer

Monopolistically competitive

Question 9

Which of the following is a potential drawback of government regulation in a monopoly market?

Accepted Answer

Reduced economic efficiency

Answer

Increased consumer protection

Answer

Lower prices for consumers

Answer

More product innovation

Question 10

Which of the following is a characteristic of a contestable market?

Accepted Answer

Low barriers to entry and exit

Answer

High concentration of market power

Answer

Significant product differentiation

Answer

Government regulation

Question 11

In a perfectly competitive market, firms:

Accepted Answer

Are price takers.

Answer

Have significant market power.

Answer

Produce differentiated products.

Answer

Face high barriers to entry.

Question 12

A monopoly market structure features:

Accepted Answer

A single seller in the market.

Answer

Numerous small-scale firms.

Answer

Identical products across firms.

Answer

Negligible barriers to entry.

Question 13

In monopolistic competition:

Accepted Answer

Numerous small firms exist in the market.

Answer

Firms possess no market power.

Answer

Products are perfectly identical.

Answer

High barriers to market entry exist.

Question 14

In a monopoly, the relationship between the marginal revenue curve and the demand curve is such that:

Accepted Answer

Marginal revenue is less than demand.

Answer

Marginal revenue is greater than demand.

Answer

Marginal revenue is equal to demand.

Answer

The relationship cannot be determined.

Question 15

The kinked demand curve model primarily explains:

Accepted Answer

Pricing behavior in oligopolistic markets.

Answer

Consequences of government regulations.

Answer

Factors influencing overall market demand.

Answer

Barriers that prevent market entry.

Question 16

Which of the following is not a key characteristic of perfect competition?

Accepted Answer

Barriers to entry

Answer

Numerous buyers and sellers

Answer

Identical products

Answer

Price-taking behavior

Question 17

In a monopoly market structure, the firm:

Accepted Answer

Is the exclusive producer of a good or service

Answer

Has limited influence on market pricing

Answer

Operates amidst numerous competitors

Answer

Faces minimal restrictions to market entry

Question 18

Which of the following accurately describes oligopoly?

Accepted Answer

Dominance by a small number of large firms

Answer

Standardized products

Answer

Insignificant market power for individual firms

Answer

No barriers to market entry

Question 19

Which market structure is most likely to result in inefficient resource allocation?

Accepted Answer

Monopoly

Answer

Perfect competition

Answer

Oligopoly

Answer

Monopolistic competition

Question 20

Price discrimination occurs when:

Accepted Answer

A firm charges different prices for the same product to different consumers

Answer

A firm sells products below cost

Answer

A firm faces a perfectly elastic demand curve

Answer

A firm holds exclusive control over a market

Question 21

Which of the following is not a potential advantage of mergers?

Accepted Answer

Reduced market rivalry

Answer

Increased economies of scale

Answer

Enhanced research and innovation

Answer

Expanded market reach

Question 22

The purpose of the Herfindahl-Hirschman Index (HHI) is to:

Accepted Answer

Measure market concentration levels

Answer

Forecast future market trends

Answer

Determine the profitability of individual firms

Answer

Evaluate the effectiveness of antitrust regulations