Market Structure Quiz | Market Structure Multiple Choice Questions and Answers

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Questions
1 Which of the following statements is true for both monopolistically competitive and oligopolistic industries?
A Firms have some degree of control over prices.
B Producers cannot benefit from knowing other firms' plans.
C It is impossible for new firms to enter the industries.
D Collusion and the creation of cartels is common.

Answer: Firms have some degree of control over prices.
2 Which of the following best describes an oligopoly?
A many monopolistically competitive firms
B a few firms sharing monopoly power
C a former monopoly that has been broken up by the government
D a government-granted franchise or monopoly

Answer: a few firms sharing monopoly power
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3 Which of the following is not a type of market structure?
A Competitive monopoly
B Perfect competition
C Oligopoly
D All of the above are types of market structures.

Answer: Competitive monopoly
4 If the market demand curve for a commodity has a negative slope then the market structure must be
A The market structure cannot be determined from the information given.
B imperfect competition.
C perfect competition.
D monopoly.

Answer: The market structure cannot be determined from the information given.
5 If a firm sells its output on a market that is characterized by many sellers and buyers, a homogeneous product, unlimited long-run resource mobility, and perfect knowledge, then the firm is a
A a perfect competitor.
B a monopolistic competitor.
C a monopolist.
D an oligopolist.

Answer: a perfect competitor.
6 Marginal revenue is equal to price for which one of the following types of market structure?
A Perfect competition
B Monopolistic competition
C Monopoly
D Oligopoly

Answer: Perfect competition
7 Which of the following industries is most likely to be monopolistically competitive?
A The car repair industry
B The electrical generating industry
C The automobile industry
D None of the above

Answer: The car repair industry
8 Product variation refers to
A an activity undertaken by a firm to increase demand.
B an activity undertaken by a firm to make demand more price inelastic.
C a problem with quality control that tends to decrease demand.
D None of the Sabha

Answer: an activity undertaken by a firm to increase demand.
9 If an imperfectly competitive firm is producing a level of output where marginal cost is equal to marginal revenue, marginal revenue is below average variable cost, and price is equal to average total cost, then the firm is
A minimizing short-run average total cost.
B in short-run equilibrium.
C in long-run equilibrium.
D breaking even.

Answer: minimizing short-run average total cost.
10 If an imperfectly competitive firm is producing a level of output where marginal cost is equal to marginal revenue, marginal revenue is below average variable cost, and price is equal to average total cost, then the firm
A should increase output.
B should shut down.
C should decrease output, but should not shut down.
D None of the above is correct.

Answer: None of the above is correct.
11 The demand curve faced by a monopolistically competitive firm is
A elastic.
B unit elastic.
C perfectly elastic.
D inelastic.

Answer: elastic.
12 Which of the following is a characteristic of monopolistic competition?
A Easy entry into and exit from the industry.
B A differentiated product.
C Few sellers.
D All of the above are characteristics of monopolistic competition.

Answer: Few sellers.
13 Which of the following is a differentiated product?
A An automobile.
B A hamburger.
C A shirt.
D All of the above are differentiated products.

Answer: All of the above are differentiated products.
14 Which of the following types of firms is likely to be a monopolistic competitor?
A An automobile manufacturer
B A restaurant
C A local telephone company.
D All of the above are likely to be monopolistic competitors

Answer: A restaurant
15 A monopolist produces 14,000 units of output and charges $14 per unit. Its marginal revenue is $8, its marginal cost is $7 and rising, its average total cost is $10, and its average variable cost is $9. The monopolist should
A increase output, which will result in an increase in the firm's positive economic profit.
B increase output, which will reduce the firm's economic losses.
C shut down, which will reduce the firm's economic losses.
D decrease output, which will result in an increase in the firm's positive economic profit

Answer: increase output, which will result in an increase in the firm's positive economic profit.
16 The value of the U.S. dollar on the foreign exchange market will tend to
A increase if there is an increase in the demand for U.S. exports by foreign countries.
B decrease if there is an increase in the demand for foreign imports by the United States.
C decrease if monetary authorities intervene on the foreign exchange market by selling U.S. dollars for foreign currencies.
D All of the above are correct.

Answer: All of the above are correct.
17 A depreciation of the U.S. dollar relative to foreign currencies will make
A foreign imports less expensive in the United States.
B U.S. exports less expensive in foreign countries.
C the demand for U.S. exports decrease.
D All of the above are correct.

Answer: U.S. exports less expensive in foreign countries.
18 When a perfectly competitive industry is in long-run equilibrium, all firms in the industry
A produce a level of output where long-run marginal cost is equal to long-run average cost.
B produce a level of output where short-run marginal cost is equal to short-run average total cost.
C earn zero economic profits.
D All of the above are correct.

Answer: All of the above are correct.
19 A natural monopolyrefers to a monopoly that is defended from direct competition by
A control over a vital input.
B a government franchise.
C a patent or copyright.
D economies of scale over a broad range of output.

Answer: economies of scale over a broad range of output.
20 In the short run, a monopolist will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cost and price is
A less than average variable cost.
B greater than average variable cost.
C greater than average total cost.
D less than average total cost.

Answer: less than average variable cost.

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