Chapter 7 - Market Structure

10 Questions | By Dot4085 | Updated: Mar 22, 2022 | Attempts: 871

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This a test an economic test on market structure.

Questions and Answers

1.

Why doesn’t the market system work to provide street lighting and other public goods?
- A.
  
  Too few of these services are available.
- B.
  
  Important needs cannot be left to chance.
- C.
  
  Voters put pressure on local governments.
- D.
  
  There is no easy way to charge individual users
2.

Why is competition among restaurants in a big city an example of monopolistic competition?
- A.
  
  Starting a restaurant is expensive.
- B.
  
  Restaurants often go out of business.
- C.
  
  All restaurants serve food, and each restaurant is distinctive.
- D.
  
  All restaurants serve people, and one restaurant serves the most people.
3.

Which of these is the best example of an externality?
- A.
  
  You decide to stop snacking between meals.
- B.
  
  You enjoy looking at your neighbor’s garden.
- C.
  
  Your shoe store stops selling your favorite style.
- D.
  
  Your new bicycle goes faster than you expected
4.

In a market with perfect competition, how are prices determined?
- A.
  
  by supply and demand
- B.
  
  By government regulation
- C.
  
  By cultural ideals of fairness
- D.
  
  By agreement among producers
5.

In which market structure do producers have the most market power?
- A.
  
  Monopolistic competition
- B.
  
  Monopoly
- C.
  
  oligopoly
- D.
  
  Perfect competition
6.

Many teenagers in a particular neighborhood work as babysitters a few hours a week. They have different personalities and degrees of experience. What is the market structure for babysitting in that neighborhood?
- A.
  
  Monopolistic competition
- B.
  
  monopoly
- C.
  
  Oligopoly
- D.
  
  Perfect competition
7.

Market structures with only a few producers, each offering a product similar or identical to the others, are typically referred to as
- A.
  
  Monopoly markets.
- B.
  
  Monopolistically competitive markets.
- C.
  
  Oligopoly markets.
- D.
  
  Competitive markets
8.

Under perfect competition,
- A.
  
  no seller sells a product above the market price.
- B.
  
  a single seller can affect price.
- C.
  
  Products are similar but not identical.
- D.
  
  Numerous restrictions prevent firms from entering the market.
9.

In this market structure, when a major airline lowers its prices, other airlines will probably
- A.
  
  Go out of business.
- B.
  
  Raise their prices.
- C.
  
  lower their prices.
- D.
  
  Maintain existing prices.
10.

Positive and negative externalities are MOSTLY called market failures because
- A.
  
  They provide public goods.
- B.
  
  They lead to higher price.
- C.
  
  They cause imperfect competition.
- D.
  
  their costs and benefits are not reflected in the market prices paid by buyers and sellers (or the demand and supply model).