Market structures - perfect competition, monopoly and price discrimination, monopolistic competition, oligopoly and models of oligopoly - One Line Questions

1. The Lerner Index is calculated as: — (Price - Marginal Cost) / Price
2. A firm operating under monopoly power will typically produce: — A lower output at a higher price than a competitive firm
3. A market with a low HHI value typically indicates: — A competitive market with many small firms
4. Monopolistic competition is characterized by: — Many sellers, differentiated products, and easy entry
5. Price discrimination is the practice of: — Charging different prices to different customers for the same good or service, where the price differences are not justified by cost differences
6. A cartel is a group of firms that: — Agree to act together as a monopoly, often by restricting output and raising prices
7. Which model assumes that firms in an oligopoly will adjust their output in response to the output decisions of their rivals, but not simultaneously? — Stackelberg Model
8. A situation where firms in an oligopoly produce identical products is known as: — Pure Oligopoly
9. Which of the following is NOT a common barrier to entry in an oligopolistic market? — Free and open access to technology
10. Which characteristic is essential for a market to be considered perfectly competitive? — Numerous buyers and sellers, and homogeneous products
11. A key feature of oligopoly is the interdependence of firms, meaning that: — Each firm's decisions regarding price, output, or advertising significantly affect its rivals
12. If a firm in an oligopoly lowers its price, its rivals are assumed to: — Follow the price decrease
13. In the kinked demand curve model, if a firm raises its price, its rivals are assumed to: — Ignore the price increase
14. If a firm is a price maker, it means the firm: — Can influence the price of its product
15. Which of the following is an example of a barrier to entry? — Significant economies of scale enjoyed by existing firms
16. Which of the following is a key characteristic of a monopoly? — A single seller with a unique product and high barriers to entry
17. Oligopoly is a market structure characterized by: — A few large firms dominating the market, with significant barriers to entry
18. Which of the following is NOT a characteristic of monopolistic competition? — Significant barriers to entry
19. To maximize profits, a monopolist will produce at the output level where: — Marginal cost equals marginal revenue
20. The Lerner Index is a measure of: — Monopoly power
21. In which market structure is the demand curve faced by an individual firm perfectly elastic? — Perfect Competition
22. Which market structure is characterized by zero economic profit in the long run due to free entry? — Perfect Competition
23. Which market structure is characterized by the 'invisible hand' guiding resources to their most efficient use? — Perfect Competition
24. In the context of oligopoly, collusion leads to outcomes that are: — Less competitive and often harmful to consumers
25. In the Bertrand model of oligopoly, firms compete by choosing: — Price simultaneously
26. In the Stackelberg model of oligopoly, firms compete by choosing: — Output sequentially, with one firm as a leader and the other as a follower
27. Which market structure is most likely to engage in significant non-price competition, such as advertising and branding? — Monopolistic Competition and Oligopoly
28. Which market structure is characterized by the most product differentiation? — Monopolistic Competition
29. The Prisoner's Dilemma is often used to illustrate the strategic decision-making challenges in which market structure? — Oligopoly
30. Which market structure leads to the lowest potential for consumer surplus? — Monopoly
31. Price leadership is a form of tacit collusion often observed in: — Oligopoly
32. Price discrimination is most likely to occur in which market structure? — Monopoly and Monopolistic Competition
33. A monopolist faces a demand curve that is: — Downward sloping
34. The demand curve faced by a firm in monopolistic competition is: — Downward sloping and relatively elastic
35. In monopolistic competition, the long-run equilibrium is characterized by: — Price > Marginal Cost and Price > Average Total Cost, but Profit = 0
36. Product differentiation in monopolistic competition can occur through: — Brand name, quality, design, and location
37. In a duopoly, where there are only two firms in the market, the firms might engage in: — Collusion or competition, depending on their strategies
38. A firm in perfect competition will maximize its profits by producing at the output level where: — Marginal cost equals marginal revenue
39. The condition for profit maximization for any firm, regardless of market structure, is: — Marginal cost equals marginal revenue
40. In the long run, a firm in monopolistic competition operates at an output level where: — Price is greater than average total cost, but greater than marginal cost
41. The kinked demand curve model, proposed by Paul Sweezy, attempts to explain: — Price stability in oligopolistic markets
42. The Cournot model of oligopoly assumes that firms compete by choosing: — Output levels simultaneously
43. For a firm to successfully practice price discrimination, it must: — Be able to prevent resale of the product between different customer groups
44. In the long run, firms in monopolistic competition earn: — Normal profits (zero economic profit)
45. In the long run, firms in a perfectly competitive industry will earn: — Normal profits (zero economic profit)
46. The Herfindahl-Hirschman Index (HHI) is a measure used to assess: — Market concentration
47. In perfect competition, what is the relationship between a firm's demand curve and its marginal revenue curve? — The demand curve is horizontal, and it is identical to the marginal revenue curve
48. Which of the following conditions must hold for price discrimination to be profitable? — The firm must be able to segment its market and have different elasticities of demand in each segment
49. A natural monopoly typically arises when: — A single firm can supply the entire market at a lower cost than two or more firms could
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