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Characteristics of Perfect Competition quiz #1 Flashcards

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Characteristics of Perfect Competition quiz #1
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  • Which of the following is not a characteristic of a perfectly competitive market?
    Product differentiation is not a characteristic of a perfectly competitive market.
  • What is pure competition?
    Pure competition is a market structure with many buyers and sellers, identical products, and free entry and exit, where firms are price takers.
  • Which of the following is characteristic of a purely competitive seller's demand curve?
    A purely competitive seller faces a perfectly elastic (horizontal) demand curve at the market price.
  • Which of the following are features of a purely competitive market?
    Features include identical goods, many buyers and sellers, and free entry and exit.
  • Which one of the following best illustrates the definition of a sole proprietorship in the context of market structures?
    A single individual owning and operating a small business, such as a local bakery.
  • Which of the following characteristics does not describe a perfectly competitive market?
    Barriers to entry do not describe a perfectly competitive market.
  • Which of the following are characteristics of a perfectly competitive industry?
    Many firms, identical products, and free entry and exit.
  • Which of the following is true of a firm in a perfectly competitive industry?
    A firm in a perfectly competitive industry is a price taker and cannot influence the market price.
  • Why do single firms in perfectly competitive markets face horizontal demand curves?
    Because each firm is a small part of the market and cannot influence the price, so it can sell any quantity at the market price.
  • Which of the following firms is the closest to being a perfectly competitive firm?
    A wheat farmer is closest to being a perfectly competitive firm.
  • Which of the following is not a characteristic of the structure of perfectly competitive markets?
    Unique or branded products are not a characteristic of perfectly competitive markets.
  • Which of the following statements about perfect competition is true?
    Firms in perfect competition are price takers and sell identical products.
  • If the firms do not collude in a perfectly competitive market, what is the result?
    Firms act independently and cannot influence the market price.
  • Which of the following is true in a perfectly competitive market?
    No single buyer or seller can influence the market price.
  • Which situation gives the best example of a price taker as it pertains to perfect competition?
    A farmer selling wheat at the market price with no ability to set a different price.
  • Which of the following is characteristic of a competitive price-taker market?
    Firms accept the market price and cannot influence it.
  • Which of the following is true for perfect competition?
    Firms sell identical products and have no control over price.
  • Which of the given factors is an assumption of perfect competition?
    Free entry and exit is an assumption of perfect competition.
  • Which of the following is an example of perfect competition?
    The market for wheat is an example of perfect competition.
  • What characterizes perfectly competitive markets? Part 2: Perfectly competitive markets have...
    Perfectly competitive markets have many buyers and sellers, identical products, and free entry and exit.
  • Which of the following kinds of market structure are not associated with market power?
    Perfect competition is not associated with market power.
  • Which condition is present in pure competition but missing in monopolistic competition?
    Identical products are present in pure competition but not in monopolistic competition.
  • Which of the following is true for a perfectly competitive market?
    Firms are price takers and products are identical.
  • Which of the following is not a condition for perfect competition?
    Limited entry and exit is not a condition for perfect competition.
  • Which of the following is a characteristic of perfectly competitive markets?
    A large number of buyers and sellers is a characteristic of perfectly competitive markets.
  • Which statement describes the variety of goods found in perfect/pure competition?
    Goods are identical and there is no variety in perfect competition.
  • Which of the following is true under conditions of perfect competition?
    Firms cannot influence the market price and must accept it.
  • Which of the following are perfectly competitive markets?
    Agricultural markets like wheat and foreign exchange markets are perfectly competitive.
  • A perfectly competitive firm does not try to raise its price above the market price because...
    It would sell nothing if it raised its price above the market price.
  • The owner of a cooperative owns what in the context of market structures?
    The owner of a cooperative owns a share of the business, which is collectively owned.
  • Which of the following is a characteristic of perfectly competitive markets?
    Free entry and exit is a characteristic of perfectly competitive markets.
  • Perfect competition is characterized by...
    Many buyers and sellers, identical products, and free entry and exit.
  • Why is pure competition considered an unsustainable system?
    Pure competition can be unsustainable if profits fall to zero, discouraging firms from remaining in the market.
  • If a perfectly competitive firm is a price taker, then...
    It must accept the market price and cannot set its own price.
  • A perfectly competitive market has ________.
    A perfectly competitive market has many buyers and sellers, identical products, and free entry and exit.
  • Which of the following is a reason why firms in a perfectly competitive market have no market power?
    Firms sell identical products and are small relative to the market.
  • Which of these is not a characteristic of pure competition?
    Product differentiation is not a characteristic of pure competition.
  • A purely competitive seller is...
    A price taker who sells identical products at the market price.
  • A perfectly competitive industry is characterized by...
    A large number of firms, identical products, and free entry and exit.
  • In both perfect competition and monopolistic competition, each firm...
    Each firm acts independently in setting output, but only in perfect competition are products identical.