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Market Structure Exercises

This document contains 11 multiple choice questions that assess understanding of market structures including monopolistic competition, imperfect competition, oligopoly, monopoly, and barriers to entry. The questions cover key characteristics of different market structures, similarities and differences between perfect competition and monopolistic competition, what would not be considered monopolistic competition, requirements for a pure monopoly, what defines an oligopolistic industry, the function of profits in markets with free entry and exit, and the short-run and long-run effects of increased demand for wheat on price, profits, and output for wheat farmers.

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Nabila Alya Zahra
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918 views2 pages

Market Structure Exercises

This document contains 11 multiple choice questions that assess understanding of market structures including monopolistic competition, imperfect competition, oligopoly, monopoly, and barriers to entry. The questions cover key characteristics of different market structures, similarities and differences between perfect competition and monopolistic competition, what would not be considered monopolistic competition, requirements for a pure monopoly, what defines an oligopolistic industry, the function of profits in markets with free entry and exit, and the short-run and long-run effects of increased demand for wheat on price, profits, and output for wheat farmers.

Uploaded by

Nabila Alya Zahra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
  • Market Structure Exercises: Contains exercises related to different market structures including monopolistic competition and monopoly, with questions and scenarios for analysis.

Market structure exercises

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1. Monopolistic competition features:


a) many buyers and sellers;
b) easy entry and exit;
c) differentiated product;
d) all of the above.
2. Imperfect competition occurs;
when any individual firm can increase its production and sales without affecting the price of the
good;
whenever firms are losing money;
when firms have some control over price;
all of the above.
3. A tight oligopoly is a market where:
there is only one supplier of the product;
there are a many sellers of a differentiated product;
there are a few sellers with comparable market shares;
there are many sellers of a homogeneous product.
4. One of the main similarities of perfect competition and monopolistic competition is:
free entry and exit;
the amount of product differentiation;
the economic profit earned in the long run;
none of the above.
5. Which of the following is a structural and not legal barrier to entry into an industry:
a) economies of scale;
b) the issuing of patents;
c) a government awarded franchise;
d) the licensing of professions.
Which of the following would not be a monopolistic competitor:
a) Joes barbershop;
b) a grocery store in a big city;
c) a Fish Taverna in Limassol;
d) Microsoft
7. For a firm to be considered a pure monopoly, it must:
a) take as given the price of the product that is established in the market;
b) be the only producer of a good for which there are no close substitutes;
c) face only a few competitors that produce similar, but not identical products;
d) none of the above
8. When an industry is classified as oligopolistic, it consists of:
a) only one seller;
b) many sellers with similar products;
c) only a few sellers with either standardized or differentiated products;
c) only a few buyers.
9. In a market that is characterized by free entry and exit, profit serves the function of:
drawing new firms into the industry when profit is normal.
drawing new firms into the industry when profit is lower than normal.
causing some firms to leave when profit is greater than normal.
none of the above.
10. Which of the following does not represent a barrier to entry into a market:
a) import quotas;
b) patent laws;
c) government restrictive practices legislation;
d) copyright laws.
11. Consider the market for wheat. You know that there are numerous firms in the
market, all of which are relatively small. Assume further that there are no entry

costs that cannot be recovered on exiting the industry. Suppose that a health fad
emerges that encourages the consumption of natural grains and cereals. What will
be the effect on profits of wheat farmers, the price of wheat and output in both the
short-run and the long-run? (Assume that input prices are constant over the
relevant range.)

Market structure exercises 1. Monopolistic competition features: a) many buyers and sellers; b) easy entry and exit; c) diffe
costs that cannot be recovered on exiting the industry. Suppose that a health fad emerges that encourages the consumption of

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