Market Quiz

In a monopoly, the business is allowed to control the price because it has complete control over the market and there are no other competitors. This allows the business to set the price at a level that maximizes its profits, without any fear of competition driving the price down. As a result, monopolies often have the ability to charge higher prices for their goods or services compared to in a competitive market.

A cartel is not legal in the United States. Cartels are formed when competing companies collude to control prices, restrict competition, and maximize their profits. Such behavior is considered anti-competitive and is prohibited under U.S. antitrust laws. These laws aim to promote fair competition, protect consumers, and prevent monopolistic practices. Therefore, the correct answer is "no" because cartels are illegal in the United States.

In an oligopoly, there are only a few businesses that dominate the market. This means that a small number of firms have significant control over the industry and can influence prices and competition. The term "a few" accurately represents the characteristic of an oligopoly, where a limited number of companies hold a substantial market share and have the power to impact market dynamics.

In a communist economy, the government controls the market. This is because communism is based on the idea of collective ownership and centralized planning, where the government owns and controls all means of production and distribution. The government makes decisions regarding what goods and services are produced, how they are produced, and how they are distributed among the population. The aim is to ensure equality and meet the needs of the entire society, rather than allowing individuals or businesses to control the market based on profit motives.

A sole proprietorship is the most common type of business. This is because it is the simplest and easiest form of business ownership. In a sole proprietorship, a single individual owns and operates the business. They have complete control over decision-making and receive all profits. This type of business does not require any formal legal processes or paperwork to establish, making it attractive to many small businesses and entrepreneurs. Additionally, the sole proprietor is personally liable for any debts or legal obligations of the business.

The invisible hand is a concept introduced by economist Adam Smith in his book "The Wealth of Nations". It refers to the self-regulating nature of the market in a capitalist system. In capitalism, individuals and businesses pursue their own self-interests, and through the interaction of supply and demand, prices and resources are allocated efficiently without the need for government intervention. The invisible hand represents the idea that the market, driven by the pursuit of profit, can guide economic activity and benefit society as a whole.

The correct answer is corporation because corporations are often large-scale businesses that have the potential to generate high sales in the U.S. due to their ability to raise capital through stock sales and their capacity for expansion and growth. Additionally, corporations have the advantage of limited liability, which attracts investors and allows them to take on more risks. Therefore, it is likely that corporations have the most sales in the U.S. compared to other types of businesses such as sole proprietorships or partnerships.

In pure competition, the price is controlled by the market. In this type of market structure, there are many buyers and sellers who have no individual control over the price. Instead, the price is determined by the interaction of supply and demand forces in the market. If there is high demand for a product, the price will increase, and if there is low demand, the price will decrease. Similarly, if there is high supply, the price will decrease, and if there is low supply, the price will increase. Therefore, the market forces of supply and demand ultimately control the price in pure competition.

A cartel is different from an oligopoly because it involves an agreement between businesses. In an oligopoly, there may be a small number of firms that dominate the market, but they do not necessarily have a formal agreement or collusion. A cartel, on the other hand, involves businesses coming together to coordinate their actions, such as setting prices or limiting production, in order to maximize their collective profits. This agreement is what sets a cartel apart from an oligopoly.

Pure competition refers to a market structure where there are many buyers and sellers, and no single entity has control over the market. In this type of market, there is a high level of competition as all firms are price takers and have little control over the market price. This means that no individual firm can influence the market price and must accept the prevailing price determined by the market forces of supply and demand. Therefore, pure competition is characterized by intense competition among firms, making it the market with the most competition.