Economics: Types of Market Structures

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What is a key characteristic of a firm in a monopolistic competitive market?

It has a lot of market power and can influence the market price.

It is the only firm in the industry.

It produces a homogeneous product.

It is eager to sell more at the going market price. (correct)

What is the primary difference between a monopolistically competitive market and a perfectly competitive market?

The level of barriers to entry.

The level of government regulation.

The level of product differentiation. (correct)

The number of firms in the market.

What is an example of a non-price competition strategy in a monopolistically competitive market?

Merging with a competitor.

Advertising. (correct)

Increasing production capacity.

Price cutting.

What is a characteristic of an oligopolistic market?

A few firms producing a differentiated product. Signup and view all the answers

What is collusion in the context of oligopolistic markets?

An informal agreement between firms to avoid competition. Signup and view all the answers

What is a cartel in the context of oligopolistic markets?

A formal agreement between firms to set prices. Signup and view all the answers

What is a market structure characterized by a single seller of a particular product?

Monopoly Signup and view all the answers

What type of monopoly occurs when one company controls manufacturing methods or has rights/patents to exclusively produce a product?

Technological Monopoly Signup and view all the answers

What is a market structure characterized by a few large firms competing with each other?

Oligopoly Signup and view all the answers

What is a business strategy in which firms try to differentiate their products from those of their competitors?

Product Differentiation Signup and view all the answers

What is an agreement among firms to restrict competition and increase prices?

Collusion Signup and view all the answers

What is a law that regulates business practices and prohibits anti-competitive behavior?

Sherman Act Signup and view all the answers

What is a characteristic of monopolistic competition?

Products are slightly different Signup and view all the answers

What is non-price competition often used for in monopolistic competition?

To differentiate products Signup and view all the answers

Which of the following is an example of an industry exhibiting monopolistic competition?

Fast food Signup and view all the answers

What is a key difference between oligopoly and monopolistic competition?

The number of firms Signup and view all the answers

What is the outcome of firms in monopolistic competition in terms of profits?

Normal profits Signup and view all the answers

What is a common strategy used by firms in oligopoly to maintain their market share?

Collusion and cartels Signup and view all the answers