Test Market Structure
Because barriers to entry are high, firms in monopolistic competition can't enter or leave the market with ease.
false
Firms in an oligopoly are totally independent; one firm's price, output, or advertising has no effect on its rivals.
false
When there is perfect competition, one buyer & one seller emerges as the primary controller over price as they squeeze out their competitors.
false
In monopolistic competition, each firm:
has some ability to set the price of its differentiated good
An industry dominated by a few firms, where each firm recognizes that its own choices will affect the choices of its rivals 7 vice versa, is:
Oligopoly
Natural monopolies such as electric transmission firms or gas delivery systems are regulated by government to protect
The consumer
An example of a commodity that could be sold by a differentiated oligopoly would be
a Ford truck
An example of a commodity that could be sold to undifferentiated oligopoly would be
a barrel of oil
An example of a commodity would be
a bushel of wheat
An oligopoly is compromised of how many firms?
a few
Which of the following is(are) true concerning monopoly?
all of the statements are true
Which of the following industries is most likely to be nationalistically competitive?
automobiles
A monopoly is a market structure characterized by:
barriers to entry & exit
If the only 2 firms in an industry agree to fix the price at a given level, this is an example of:
collusion
Market structures describe all of the following EXCEPT
how a market is constructed
One characteristic of a perfectly competitive market is that there are ____________ sellers of the good or service.
hundreds or thousands of
An assumption of the model of perfect competition is:
identical goods
Monopolistic competition is an industry characterized by a:
large number of firms producing similar products, with relatively easy entry for firms
If a Florida strawberry wholesaler is in a perfectly competitive market, that wholesaler will have a ____________ share of the market, and consumers will consider her strawberries to be ____________. Therefore, ____________ advertising will take place in the market.
large; differentiated; extensive
Monopolistic competition is an industry characterized by a ____________ number of firms producing ____________ products with ____________ for firms.
large; similar; relative easy entry
The ability of a firm to raise its price without losing sales to competitors is called
market power
An industry with a large number of relatively small firms producing differentiated products in a market with easy entry & exit firms is:
one of monopolistic competition
Due to the existence of a large number of similar, but not identical, substitutes in most communities, the market for chiropractors is best considered:
monopolistic competition
The two theoretical extremes of the market structure spectrum are occupied on 1 end by perfect competition & on the other end by:
monopoly
What is the market structure called ____________ is describe as having a single producer selling a single, undifferentiated product.
monopoly
Most elastic, gas, & water companies are examples of:
natural monopolies
If there are two gas stations in the town of Smalltown, then the gasoline industry in Smalltown is probably best characterized as:
oligopolistic
The market structure that is characterized by only a small number of production is referred to as:
oligopoly
A cartel is an example of:
overt collusion
Assume an industry is dominated by a few firms. Each of these firms acknowledges that its own choices affect the choices of its rivals. Each firm also recognizes that its rivals' choices affect the decisions it makes. This industry is an example of an
perfect competition
A monopoly is likely to ____________ & ____________ than a perfectly competitive firm.
produce less; charge more
In perfect competition, each firm:
produces a standardized product
Oligopoly is a market structure that is characterized by a:
small number of interdependent firms producing identical or differentiated products
Farmers operate in a perfectly competitive market. Why?
the amount one farmer sells has no affect on the market
Perfect competition is characterized by:
the inability of any one firm to influence price
3 types of entry barriers for monopolies are legal restrictions, economies of scale, and control of an essential resource.
true
Because a monopoly supplies the entire market, the demand curve for a monopolist's output also is the market demand curve.
true
Competition forces firms to be efficient.
true
The monopoly market structure is the extreme opposite of the perfect competition market structure.
true
Firms in monopolistic competition are said to operate
with excess capacity