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Market Structures

Terms in this set (91)

Perfect competition.
Market structure in which a large number of firms all produce the same product:
Commodity.
A product, such as petroleum, notebook paper, or milk, that is the same no matter who produces it:
C
Which of the following is not a condition for perfect competition?
(A) Many buyers and sellers participate in the market.
(B) Sellers are able to enter and exit the market freely.
(C) Sellers offer a wide variety of products.
(D) Buyers and sellers are well informed about products.
C
Why does a perfectly competitive market require many participants as both buyers and sellers?
(A) So that both buyer and seller have the same information.
(B) In order to maintain quality over the goods.
(C) So that no individual can control the price.
(D) Because the merchandise must be uniform.
Barrier to entry.
Any factor that makes it difficult for a new firm to enter a market:
Imperfect competition.
A market structure that does not meet the conditions of perfect competition:
Start-up costs.
The expenses a firm must pay before it can begin to produce and sell goods:
A
Which of the following is not an example of barriers to entry?
(A) In some counties, laws require retail stores to be closed on Sundays.
(B) Cable companies must lay miles of underground cable before they can serve a single customer in a new market.
(C) An entrepreneur who wants to own a clothing store must rent a building, hire workers, and buy clothing to sell.
(D) A person who wishes to practice medicine is required to attend medical school, do an internship, and pass a state exam.
D
What is the relationship between start-up costs and a competitive market?
(A) There is no consistent relationship between start-up costs and the competitiveness of a market.
(B) Low start-up costs are likely to make a market less competitive.
(C) Markets with high start-up costs are more likely to be perfectly competitive.
(D) Markets with high start-up costs are less likely to be perfectly competitive.
D
How much control over price do companies in a perfectly competitive market have?
(A) Total control
(B) Very little
(C) Some
(D) None
D
How does a perfect market influence output?
(A) Different firms each strive to make more goods and capture more of the market.
(B) Different firms make different amounts of goods, but some make a profit and others do not.
(C) Each firm makes its output as large as possible even though some goods are not sold.
(D) Each firm adjusts its output so that its costs, including profit, are covered.
B
In a perfectly competitive market, individual consumers have _____.
(A) Less influence than producers concerning prices.
(B) No influence over determining price.
(C) More influence than producers concerning prices.
(D) More influence than consumers in other market structures.
D
Which of the following could not prevent a market from becoming perfectly competitive?
(A) High start-up costs.
(B) Problems accessing necessary technology.
(C) Lack of technological know-how.
(D) Excessive information.
D
Which of the following is characteristic of a competitive market?
(A) Low output
(B) High costs
(C) Inexhaustible supply
(D) Efficiency
A
Milk is considered a commodity because it is which of the following?
(A) The same product regardless of who sells it.
(B) An agricultural product.
(C) An inexpensive product.
(D) A product that can be bought in many different ways.
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