Q1. Which of the following is a characteristic of Perfect Competition?

1. Firms produce similar but not identical products.
2. Firms have no close competitors.
3. Firms produce identical products.
4. Firms advertise their products to differentiate themselves from their many rivals.

Q2. When a major airline lowers its ticket prices, other airlines will probably

1. maintain their current prices.
2. lower their prices as well.
3. go out of business.
4. raise their prices.

Q3. Which of the following would be considered a monopoly?

1. a company that manufactures automobiles
2. a farm that sells potatoes at the local farmer's market on Saturdays
3. a public utility company
4. a fast food restaurant chain

Q4. The term "Market Structure" refers to

1. the behavior of monopolies.
2. a market graph that reflects prices at equilibrium.
3. price wars
4. the degree of competition among firms in the same industry.

Q5. Which of the following is a differentiated product?

1. Adidas shoes
2. Wheat
3. Corn
4. a sharp of corporate stock

Q5. If you own the only pharmacy in Marfa, TX (population 2,000). You have a

1. natural monopoly.
2. technological monopoly.
3. geographic monopoly.
4. perfect monopoly.

Q6. Sally usually goes to dinner on Friday nights. Her favorite place is an Italian restaurant that advertises they use all organic ingredients. While she has many choices of Italian restaurants in her area, she likes this one, because the organic options make it seem more healthy. This restaurant is in which market structure?

1. Monopolistic competition
2. Oligopoly
3. Natural Monopoly
4. Geographic Monopoly

Q7. Which of the following describes monopolistic competition?

1. Firms have no competitors.
2. Firms do not advertise.
3. Firms sell identical products.
4. Firms sell similar, but not identical products and advertise to differentiate their brand from competitors.

Q8. An artist has protected an original song with a copyright. Now other artists cannot record the song without getting permission or paying this artist a fee. This artist has acquired

1. a natural monopoly.
2. a geographical monopoly.
3. a technological monopoly.
4. none of the above.

Q9. Subway sandwiches encourages their customers to "Eat Fresh" while Potbelly's advertises that their sandwiches are toasted. This is an example of

1. product differentiation.
2. firms competing in the monopolistic competition market structure.
3. non-price competition.
4. all of the above.

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Matching: For the next 5 questions, choose the correct market structure from the drop-down menu.

1. May engage in price fixing and collusion
2. A large number of firms selling identical products
3. One firm with no close substitutes
4. Many competitors with fierce rivalries
5. Interdependent behavior and price leadership

Options for all 5 are

1. Perfect competition
2. Monopolistic Competition
3. Oligopoly
4. Monopoly