Market Structures and Competition Test Answers

Which helps enable an oligopoly to form within a market?
a. Costs of starting a competing business are too high.
b. The government restricts market entry.
c. The number of options in a market confuses consumers.
d. No competition exists between producers.

Wellness Pharmaceuticals has released a new antidepressant, Lexabuzac. Which type of monopoly does the company most likely have on this medication?
a. natural monopoly
b. de facto monopoly
c. government monopoly
d. technological monopoly

In the United States, which type of industry is often considered part of an oligopoly?
a. electric companies
b. cell phone carriers
c. mail delivery services
d. denim companies

______ is the term used to describe the amount of control or influence that consumers have on a market.
a. Sovereignty
b. Competition
c. Oligopoly

In an oligopolistic market, consumer choice is
a. nonexistent.
b. limited.
c. extensive.
d. infinite.

Why is the automobile industry considered an oligopoly?
a. It offers little differentiation within the market.
b. It has significant barriers to entry.
c. It is controlled by companies that patent key technology.
d. It relies on price variation to attract customers.
e. It depends on brand loyalty and image to generate sales.
f. It is dominated by a few key players.

Why is competition limited in an oligopoly?
a. High entry costs prevent new producers from entering the market.
b. Producers completely refuse to engage in price wars.
c. No major distinctions exist between producers.
d. Producers actively segment the market to avoid competition.

Natural monopolies occur when one producer
a. can meet the market’s entire demand.
b. controls the method of production.
c. is the only one authorized to produce a given product.
d. creates unique products.

The market for which item generally involves pure competition?
a. cola
b. corn
c. jeans
d. ice cream

In pure competition, producers compete exclusively on the basis of
a. selling identical items.
b. advertising heavily to promote their good.
c. producing the unique features of their good.
d. focusing on maintaining a positive image.

Which helps enable an oligopoly to form within a market?

Costs of starting a competing business are too high.

The government restricts market entry.

The number of options in a market confuses consumers.

No competition exists between producers.

Why is the automobile industry considered an oligopoly?

It offers little differentiation within the market.

It has significant barriers to entry.

It is controlled by companies that patent key technology.

It relies on price variation to attract customers.

It depends on brand loyalty and image to generate sales.

It is dominated by a few key players.

Wellness Pharmaceuticals has released a new antidepressant, Lexabuzac. Which type of monopoly does the company most likely have on this medication?

natural monopoly

de facto monopoly

government monopoly

technological monopoly

The market for which item generally involves pure competition?

cola

corn

jeans

ice cream

Why is competition limited in an oligopoly?

High entry costs prevent new producers from entering the market.

Producers completely refuse to engage in price wars.

No major distinctions exist between producers.

Producers actively segment the market to avoid competition.

In pure competition, producers compete exclusively on the basis of

sell identical items.

advertise heavily to promote their good.

product the unique features of their good.

focus on maintaining a positive image.

If consumer sovereignty is considered greatest in a system of pure competition, why is sovereignty still limited?

Consumers still rely on producers’ set prices.

Few products are actually sold on the basis of pure competition.

Choices are driven by price when goods are identical.

Limited price variations restrict actual choice.

Which best describes the availability of substitutes in a monopoly?

Price points vary.

There are no substitutes.

There are different brands.

Products have different features.

Who sets the price in a monopolistic competition?

producers and consumers

consumers only

government

producers only

When an oligopoly exists, how many producers dominate the market?

none

one

a few

many

Natural monopolies occur when one producer

can meet the market’s entire demand.

controls the method of production.

is the only one authorized to produce a given product.

creates unique products.

___________ is the type of competition that occurs in a competitive market without identical producers.

monopolistic

pure competition

an oligopoly

__________ Is the term used to describe the amount of control or influence that consumers have on a market.

sovereignty

competition

oligopoly

Which best describes how the government enables government monopolies to exist?

by issuing a patent

by allowing natural monopolies to exist

by creating and running a monopoly

by owning the means of production