Understanding Market Structures Quiz
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Questions and Answers

What type of industry often exhibits characteristics of pure monopoly, controlling around 75% to 80% of the market?

Public utilities

In a competitive market, what type of firm is considered a price-maker?

Monopoly firm

What term refers to the ability of a firm to charge a price higher than the cost by restricting output?

Market power

Which market structure is characterized by a single seller with no close substitutes?

<p>Pure monopoly</p> Signup and view all the answers

What measure refers to the ability of the firm/seller to affect the price of a product?

<p>Degree of monopoly power</p> Signup and view all the answers

What is the term used to describe a market where a small number of firms dominate and collude to control the market?

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

What are the main factors that can block the entry of new firms into a market?

<p>Legal, technological, economic or natural obstacles can block the entry of new firms into a market.</p> Signup and view all the answers

How does a monopolist determine the price and output level?

<p>A monopolist can fix both the price and quantity of output to be sold in the market, as they have complete control over the market supply in the absence of close substitutes.</p> Signup and view all the answers

What are the limitations on a monopolist's ability to charge high prices?

<p>Even though a monopolist is a price-maker, they cannot disregard the demand situation in the market. If buyers refuse to buy at a very high price, the monopolist has to keep a lower price.</p> Signup and view all the answers

What is the difference between absolute monopoly and limited monopoly?

<p>Absolute or pure monopoly refers to a market controlled by a single producer who can charge any price, while limited monopoly refers to a situation where the firm has some, but not complete, control over supply and pricing.</p> Signup and view all the answers

How does a monopolist set the profit-maximizing price and output level?

<p>A monopolist will produce the level of output that maximizes their profits, and charge the price at which they can sell that entire output.</p> Signup and view all the answers

What type of market structure has a perfectly elastic degree of product?

<p>Monopolistic Market</p> Signup and view all the answers

What type of market structure is characterized by a few large firms that have significant market power?

<p>Oligopoly is the market structure characterized by a few large firms that have significant market power.</p> Signup and view all the answers

What type of market structure is characterized by a producer controlling the market supply of a product with no close substitutes?

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

What is the term used to describe a market structure with a high relative degree of monopoly power?

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

In which market structure is the cross-elasticity of demand between a product and other products very low?

<p>Monopolistic Market</p> Signup and view all the answers

What term is preferred by some to describe a market structure with an absence of close substitutes?

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

What is the term used to describe a market structure where a monopolist faces a threat of competition even from a remote substitute?

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

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