Market Structures Flashcards
What are the four main types of market structures in economics?
Perfect competition, monopolistic competition, oligopoly, and monopoly.
True or False: In a perfect competition market, there are many buyers and sellers.
True.
Fill in the blank: A market structure characterized by a single seller is known as a __________.
monopoly.
What is a key characteristic of monopolistic competition?
Product differentiation.
In which market structure do a few firms dominate the market?
Oligopoly.
True or False: In perfect competition, firms have market power.
False.
What type of market structure features identical products?
Perfect competition.
What is the primary goal of firms in a monopoly?
Maximizing profits.
Which market structure is characterized by a downward sloping demand curve for the firm?
Monopoly.
True or False: In an oligopoly, firms are interdependent.
True.
Fill in the blank: __________ refers to the situation where many firms sell products that are similar but not identical.
Monopolistic competition.
What is the main feature of a monopoly that differentiates it from other market structures?
The absence of close substitutes for its product.
In which market structure do firms compete on price and non-price factors?
Monopolistic competition.
What is one potential disadvantage of monopolies for consumers?
Higher prices and reduced output.
Which market structure has the highest barriers to entry?
Monopoly.
True or False: Firms in perfect competition can freely enter and exit the market.
True.
What is the term for a market with no barriers to entry or exit?
Perfect competition.
Fill in the blank: In __________, firms may engage in price wars to gain market share.
Oligopoly.
What is a common example of an oligopoly?
The automobile industry.
True or False: In monopolistic competition, firms are price takers.
False.
What is the primary characteristic of products in an oligopoly?
They may be homogeneous or differentiated.
In which market structure do firms have some degree of market power?
Monopolistic competition and monopoly.
What is the key feature of a perfectly competitive market?
No single firm can influence the market price.
Fill in the blank: A __________ is a market structure where a few large firms dominate the industry.
oligopoly.
What is a characteristic of monopolistic competition?
Product differentiation and many sellers.
True or False: Perfect competition results in the most efficient allocation of resources.
True.
What market structure is characterized by a large number of firms selling similar but not identical products?
Monopolistic competition.
What is the effect of high barriers to entry in a market?
It reduces competition.
Fill in the blank: In a monopoly, the firm is the __________.
price maker.
What is a major consequence of monopolistic competition?
Excess capacity and inefficiency.
In which market structure are firms likely to engage in collusion?
Oligopoly.
True or False: Oligopolistic firms are independent in their pricing strategies.
False.
What is the term for a market with one seller and many buyers?
Monopoly.
Fill in the blank: __________ competition leads to innovation and variety in products.
Monopolistic.
What is the demand curve shape for a firm in perfect competition?
Horizontal (perfectly elastic).
What is the main focus of firms in monopolistic competition?
Differentiating their products.
True or False: In a monopoly, economic profits can be sustained in the long run.
True.
What is a common characteristic of perfect competition?
Homogeneous products.
Fill in the blank: Firms in __________ have limited pricing power due to the presence of close substitutes.
monopolistic competition.
What is a potential benefit of oligopolies?
Economies of scale.
What is the primary characteristic that distinguishes a monopoly from other market structures?
Single seller with no close substitutes.
True or False: In perfect competition, firms can earn economic profits in the long run.
False.
What is the primary reason for the existence of monopolies?
High barriers to entry.
Fill in the blank: An oligopoly may lead to __________ if firms coordinate their pricing.
higher prices.
What role does product differentiation play in monopolistic competition?
It allows firms to have some control over pricing.
What is a defining feature of the demand curve for a monopoly?
Downward sloping.
True or False: In monopolistic competition, firms can easily enter and exit the market.
True.
What is the outcome of a price war in an oligopoly?
Lower prices for consumers, but potential losses for firms.
Fill in the blank: In a __________, firms may produce at a level where average total costs are minimized.
perfect competition.
What is the primary competition method in monopolistic competition?
Non-price competition.
True or False: In a monopoly, the firm faces a perfectly elastic demand curve.
False.
What is an example of a market structure with significant barriers to entry?
Monopoly.
Fill in the blank: The short-run equilibrium for a monopolist occurs where marginal revenue equals __________.
marginal cost.
What is the term for a market where there are many firms selling identical products?
Perfect competition.
True or False: Firms in an oligopoly can achieve higher profits through collusion.
True.
What is one of the main disadvantages of monopolistic competition?
Inefficiency due to excess capacity.
Fill in the blank: In a monopoly, the firm has control over the __________.
price.
What is a characteristic of a perfectly competitive market?
Firms are price takers.
True or False: Monopolistic competition results in a homogeneous product.
False.
What is the competitive behavior of firms in an oligopoly?
They may cooperate or compete aggressively.
Fill in the blank: In a monopoly, the firm can sustain __________ profits.
economic.
What is the effect of perfect competition on consumer choice?
Increases variety and lowers prices.
True or False: All firms in a monopolistic competition have identical products.
False.
What is the primary goal of firms in oligopoly?
Maximizing profits while considering competitors’ actions.
Fill in the blank: An __________ is a market structure with many firms and significant barriers to entry.
oligopoly.
What is the impact of product differentiation in monopolistic competition?
It allows firms to charge different prices.
True or False: In a monopoly, there are many substitutes available for consumers.
False.
What is a key characteristic of a firm in perfect competition?
Cannot influence market prices.
Fill in the blank: The primary characteristic of __________ is a few firms controlling most of the market share.
oligopoly.
What is the result of a lack of competition in a monopoly?
Higher prices and lower quality.
True or False: In monopolistic competition, firms can make long-run economic profits.
False.
What is the market structure that leads to the most efficient production?
Perfect competition.
Fill in the blank: Oligopolies may engage in __________ to increase their market power.
collusion.
What is one of the main features of monopolistic competition?
Product differentiation.
True or False: Firms in perfect competition can set their own prices.
False.
What is the primary characteristic of a firm’s demand curve in a monopoly?
It is downward sloping.
Fill in the blank: In __________, firms may have some control over their pricing due to differentiated products.
monopolistic competition.
What is the primary reason for the existence of monopolistic competition?
Product differentiation among firms.
True or False: In oligopoly, firms may benefit from economies of scale.
True.
What is a consequence of a monopoly on market efficiency?
It can lead to allocative and productive inefficiency.
Fill in the blank: The demand curve for a firm in perfect competition is perfectly __________.
elastic.
What is the relationship between price and marginal cost in a monopoly?
Price is greater than marginal cost.
True or False: Monopolistic competition leads to lower prices for consumers compared to monopoly.
True.
What is the primary characteristic of an oligopoly?
A few large firms dominate the market.
Fill in the blank: __________ is the market structure where firms compete based on price and non-price factors.
Monopolistic competition.
