Economics: Types of Market Structures
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Questions and Answers

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?

    <p>A few firms producing a differentiated product.</p> Signup and view all the answers

    What is collusion in the context of oligopolistic markets?

    <p>An informal agreement between firms to avoid competition.</p> Signup and view all the answers

    What is a cartel in the context of oligopolistic markets?

    <p>A formal agreement between firms to set prices.</p> Signup and view all the answers

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

    <p>Monopoly</p> 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?

    <p>Technological Monopoly</p> Signup and view all the answers

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

    <p>Oligopoly</p> Signup and view all the answers

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

    <p>Product Differentiation</p> Signup and view all the answers

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

    <p>Collusion</p> Signup and view all the answers

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

    <p>Sherman Act</p> Signup and view all the answers

    What is a characteristic of monopolistic competition?

    <p>Products are slightly different</p> Signup and view all the answers

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

    <p>To differentiate products</p> Signup and view all the answers

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

    <p>Fast food</p> Signup and view all the answers

    What is a key difference between oligopoly and monopolistic competition?

    <p>The number of firms</p> Signup and view all the answers

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

    <p>Normal profits</p> Signup and view all the answers

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

    <p>Collusion and cartels</p> Signup and view all the answers

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