3.1.5.1 Market structures

• What are market structures broadly categorized into?

  Competitive and concentrated
• Barriers to entry are high in competitive markets.

  False
• In perfect competition, products are homogenous
• Which market structure is characterized by few firms and high barriers to entry?

  Oligopoly
• Competitive markets have evenly distributed market share.

  True
• In perfect competition, firms have no pricing power
• What is a key characteristic of perfectly competitive markets regarding firm size?

  Small firms with no influence
• Low barriers to entry exist in perfectly competitive markets.

  True
• In competitive markets, there are many firms
• Which type of market structure has high pricing power?

  Concentrated markets
• Monopolies have very high pricing power.


  True
• In monopolistic competition, barriers to entry are low
• What prevents new firms from entering concentrated markets?

  High barriers to entry
• Match the market structure with its pricing power:

  Perfect Competition ↔️ None

  Monopoly ↔️ Very High

  Oligopoly ↔️ High

  Monopolistic Competition ↔️ Limited
• In perfectly competitive markets, products are homogenous
• Match the monopoly feature with its description:

  Single Firm ↔️ Only one company in the market

  High Barriers to Entry ↔️ Difficult for new firms to enter

  Unique Products ↔️ No close substitutes available

  High Pricing Power ↔️ Ability to set prices without competition
• Match the market structure with its characteristics:

  Perfect Competition ↔️ Many firms, no pricing power

  Monopoly ↔️ Single firm, high barriers

  Oligopoly ↔️ Few firms, high barriers

  Monopolistic Competition ↔️ Many firms, low barriers
• Monopolies have very high barriers to entry.

  True
• What is the primary difference between competitive and concentrated markets in terms of pricing power?

  Low versus high
• What type of product is associated with perfect competition?

  Homogenous
• In monopolistic competition, firms offer differentiated products.
• What is the result of firms being price takers in perfect competition?

  Efficient resource allocation
• Only a single firm operates in a monopoly.


  True
• What are two common strategies used by oligopolies?

  Price leadership and collusion
• How do firms in monopolistic competition differentiate their products?

  Branding, quality, or service
• How does the number of firms differ between competitive and concentrated markets?

  Many vs. few
• Match the market structure with its feature:

  Perfect Competition ↔️ No pricing power

  Monopoly ↔️ High barriers to entry

  Oligopoly ↔️ Few dominant firms

  Monopolistic Competition ↔️ Limited product differentiation
• Competitive markets typically have a large number of firms
• Which type of market structure has high pricing power?

  Concentrated markets
• Firms in competitive markets can easily dominate pricing.

  False
• The four main types of market structures are perfect competition, monopoly, oligopoly, and monopolistic competition
• Which market structure has a single firm with high barriers to entry?

  Monopoly
• Monopolistic competition allows firms to differentiate their products.


  True
• Firms in perfectly competitive markets are price takers
• Monopolies have high pricing power
• What type of market structure has many firms with low market shares?

  Monopolistic competition
• What is monopolistic competition characterized by?

  Many firms, low barriers
• Monopolistic competition has high barriers to entry.

  False
• What is product differentiation in monopolistic competition achieved through?

  Branding, quality, service
• Firms in monopolistic competition can easily raise prices without losing customers.

  False