Market Structures Flashcards
What are the four main types of market structures?
Perfect competition, monopolistic competition, oligopoly, and monopoly.
True or False: In a perfect competition market, firms are price makers.
False.
Fill in the blank: A _______ is a market structure with many firms selling similar but not identical products.
monopolistic competition.
What characterizes a monopoly?
A single seller controls the entire market for a product or service.
Which market structure is characterized by a few large firms dominating the market?
Oligopoly.
What is the primary goal of firms in any market structure?
Maximizing profit.
True or False: In perfect competition, all firms sell identical products.
True.
What is a key feature of oligopoly?
Interdependence among firms, where the actions of one firm influence others.
Name one example of a product that might be sold in a monopolistic competition market.
Restaurants or clothing brands.
What is a price taker?
A firm that must accept the market price for its product; typical in perfect competition.
In which market structure do firms engage in non-price competition?
Monopolistic competition.
Multiple Choice: Which of the following is NOT a characteristic of oligopoly? A) Few sellers B) High barriers to entry C) Homogeneous products D) Interdependence
C) Homogeneous products.
What is meant by ‘barriers to entry’?
Obstacles that make it difficult for new firms to enter a market.
True or False: In a monopoly, consumers have many substitutes for the product offered.
False.
Fill in the blank: In a market with _______ competition, firms sell identical products but compete on price.
perfect.
What is a key difference between perfect competition and monopolistic competition?
In perfect competition, products are identical; in monopolistic competition, products are differentiated.
What is a cartel?
A group of firms that collude to control prices and limit competition.
Multiple Choice: Which market structure typically has the lowest prices for consumers? A) Monopoly B) Oligopoly C) Perfect competition D) Monopolistic competition
C) Perfect competition.
What does ‘market power’ refer to?
The ability of a firm to influence the price of its product.
True or False: A firm operating in an oligopoly has no control over pricing.
False.
What is the role of advertising in monopolistic competition?
To differentiate products and create brand loyalty.
Fill in the blank: A monopoly is often considered a _______ market structure.
price maker.
What is the significance of the kinked demand curve in oligopoly?
It illustrates price rigidity; firms are reluctant to change prices due to competitor reactions.
What is the main objective of a firm in a monopoly?
To maximize profit by setting prices above marginal cost.
