AnswersHSA 26-27 EconomicsMarket Structures and Competition

Market Structures and Competition Answers

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If consumer sovereignty is considered greatest in a system of pure competition, why is sovereignty still limited?

A
Consumers still rely on producers’ set prices.
B
Few products are actually sold on the basis of pure competition.
C
Choices are driven by price when goods are identical.
D
Limited price variations restrict actual choice.
3

SovereigntyCompetitionOligopoly

A
Sovereignty
B
Competition
C
Oligopoly
4

Which helps enable an oligopoly to form within a market?

A
Costs of starting a competing business are too high.
B
The government restricts market entry.
C
The number of options in a market confuses consumers.
D
No competition exists between producers.
6

Why is competition limited in an oligopoly?

A
High entry costs prevent new producers from entering the market.
B
Producers completely refuse to engage in price wars.
C
No major distinctions exist between producers.
D
Producers actively segment the market to avoid competition.
7

Natural monopolies occur when one producer

A
can meet the market’s entire demand.
B
controls the method of production.
C
is the only one authorized to produce a given product.
D
creates unique products.
8

Which best describes the availability of substitutes in a monopoly?

A
Price points vary.
B
There are no substitutes.
C
There are different brands.
D
Products have different features.
10

In pure competition, producers compete exclusively on the basis of

A
selling identical items.
B
advertising heavily to promote their good.
C
producing the unique features of their good.
D
focusing on maintaining a positive image.
11

[BLANK]

A
Sovereignty
B
Competition
C
Oligopoly
12

Which is an example of a government monopoly in the United States?

A
the US Postal Service
B
the Internal Revenue Service (IRS)
C
the US Environmental Protection Agency (EPA)
D
the National Park Service
13

Wellness Pharmaceuticals has released a new antidepressant, Lexabuzac. Which type of monopoly does the company most likely have on this medication?

A
natural monopoly
B
de facto monopoly
C
government monopoly
D
technological monopoly
14

If consumer sovereignty is considered greatest in a system of pure competition, why is sovereignty still limited?

A
Consumers still rely on producers’ set prices.
B
Few products are actually sold on the basis of pure competition.
C
Choices are driven by price when goods are identical.
D
Limited price variations restrict actual choice.
15

When an oligopoly exists, how many producers dominate the market?

A
none
B
one
C
a few
D
many
16

Why is competition limited in an oligopoly?

A
High entry costs prevent new producers from entering the market.
B
Producers completely refuse to engage in price wars.
C
No major distinctions exist between producers.
D
Producers actively segment the market to avoid competition.
17

Which helps enable an oligopoly to form within a market?

A
Costs of starting a competing business are too high.
B
The government restricts market entry.
C
The number of options in a market confuses consumers.
D
No competition exists between producers.
18

Why is the automobile industry considered an oligopoly? Select all that apply.

A
It offers little differentiation within the market.
B
It has significant barriers to entry.
C
It is controlled by companies that patent key technology.
D
It relies on price variation to attract customers.
E
It depends on brand loyalty and image to generate sales.
F
It is dominated by a few key players.
19

In pure competition, producers compete exclusively on the basis of

A
selling identical items.
B
advertising heavily to promote their good.
C
producing the unique features of their good.
D
focusing on maintaining a positive image.
20

In the United States, which type of industry is often considered part of an oligopoly?

A
electric companies
B
cell phone carriers
C
mail delivery services
D
denim companies

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