Q.1 Which market structure is characterized by a single seller controlling the entire market?
Perfect Competition
Monopoly
Oligopoly
Monopolistic Competition
Explanation - A monopoly exists when there is only one seller in the market, giving them significant control over price and output.
Correct answer is: Monopoly
Q.2 In which market structure do firms sell differentiated products and have some control over price?
Perfect Competition
Oligopoly
Monopolistic Competition
Monopoly
Explanation - In monopolistic competition, many sellers exist, but each sells slightly differentiated products, giving them some pricing power.
Correct answer is: Monopolistic Competition
Q.3 Which market structure is defined by a few large firms dominating the market?
Monopoly
Oligopoly
Perfect Competition
Monopolistic Competition
Explanation - Oligopoly consists of a small number of large firms that dominate the market and often engage in strategic behavior.
Correct answer is: Oligopoly
Q.4 In perfect competition, the demand curve faced by an individual firm is:
Downward sloping
Perfectly elastic
Perfectly inelastic
Kinked
Explanation - In perfect competition, individual firms are price takers, so the demand curve they face is perfectly elastic at the market price.
Correct answer is: Perfectly elastic
Q.5 Which of the following is NOT a feature of monopoly?
Single seller
Barriers to entry
Price taker
Unique product
Explanation - Monopolies are price makers, not price takers, because they control the market supply.
Correct answer is: Price taker
Q.6 Which market structure typically has free entry and exit of firms?
Monopoly
Oligopoly
Perfect Competition
Monopolistic Competition
Explanation - Perfect competition assumes no barriers to entry or exit, allowing firms to enter or leave the market freely.
Correct answer is: Perfect Competition
Q.7 Which market structure is most likely to engage in non-price competition, like advertising?
Perfect Competition
Monopolistic Competition
Monopoly
Oligopoly
Explanation - Firms in monopolistic competition often use advertising and product differentiation to attract customers.
Correct answer is: Monopolistic Competition
Q.8 The kinked demand curve is associated with which market structure?
Monopoly
Perfect Competition
Oligopoly
Monopolistic Competition
Explanation - In oligopoly, the kinked demand curve theory explains price rigidity due to firms' reactions to rivals' price changes.
Correct answer is: Oligopoly
Q.9 Which market structure leads to allocative efficiency in the long run?
Perfect Competition
Monopoly
Oligopoly
Monopolistic Competition
Explanation - Perfect competition achieves allocative efficiency as price equals marginal cost in the long run.
Correct answer is: Perfect Competition
Q.10 Which market structure may produce at a level where average cost is not minimized?
Monopoly
Perfect Competition
Oligopoly
Monopolistic Competition
Explanation - Firms in monopolistic competition often operate with excess capacity, producing below the level that minimizes average cost.
Correct answer is: Monopolistic Competition
Q.11 Price discrimination is a pricing strategy most commonly used by:
Perfectly competitive firms
Monopolists
Oligopolists
Monopolistic competitors
Explanation - Monopolists can charge different prices to different consumers based on willingness to pay, maximizing profits.
Correct answer is: Monopolists
Q.12 Which market structure has many firms selling identical products?
Monopoly
Perfect Competition
Oligopoly
Monopolistic Competition
Explanation - Perfect competition consists of many sellers offering homogeneous (identical) products.
Correct answer is: Perfect Competition
Q.13 Collusion among firms is most likely in which market structure?
Monopoly
Oligopoly
Perfect Competition
Monopolistic Competition
Explanation - Oligopolistic firms may collude to set prices or output because the market has few dominant players.
Correct answer is: Oligopoly
Q.14 Which of the following is a barrier to entry in a monopoly?
High setup cost
Many sellers
Identical products
Perfect information
Explanation - Monopolies often exist due to barriers like high setup costs, patents, or control over resources.
Correct answer is: High setup cost
Q.15 Price rigidity is a common feature of which market structure?
Monopoly
Oligopoly
Perfect Competition
Monopolistic Competition
Explanation - Oligopolistic firms often maintain stable prices because changes may lead to unpredictable reactions from competitors.
Correct answer is: Oligopoly
Q.16 Which market structure is considered socially most efficient?
Monopoly
Perfect Competition
Oligopoly
Monopolistic Competition
Explanation - Perfect competition leads to both allocative and productive efficiency, making it socially optimal.
Correct answer is: Perfect Competition
Q.17 A firm in which market structure is a price maker?
Perfect Competition
Monopolistic Competition
Monopoly
All of the above
Explanation - A monopolist has the power to set prices since it is the sole seller in the market.
Correct answer is: Monopoly
Q.18 Which market structure may have advertising as a significant cost?
Perfect Competition
Monopolistic Competition
Monopoly
Oligopoly
Explanation - Firms in monopolistic competition use advertising to differentiate their products.
Correct answer is: Monopolistic Competition
Q.19 Which market structure is characterized by mutual interdependence among firms?
Perfect Competition
Monopoly
Oligopoly
Monopolistic Competition
Explanation - Oligopolistic firms’ decisions affect one another, creating mutual interdependence.
Correct answer is: Oligopoly
Q.20 The long-run economic profit in a perfectly competitive market is:
Positive
Negative
Zero
Uncertain
Explanation - In the long run, free entry and exit ensure that firms in perfect competition earn zero economic profit.
Correct answer is: Zero
Q.21 Which market structure can lead to product variety for consumers?
Monopoly
Perfect Competition
Monopolistic Competition
Oligopoly
Explanation - Differentiated products in monopolistic competition provide consumers with variety.
Correct answer is: Monopolistic Competition
Q.22 Price leadership is commonly seen in which market structure?
Monopoly
Oligopoly
Perfect Competition
Monopolistic Competition
Explanation - In oligopoly, one dominant firm may set prices that other firms follow, known as price leadership.
Correct answer is: Oligopoly
Q.23 Which market structure faces a perfectly elastic demand curve at the market price?
Perfect Competition
Monopoly
Oligopoly
Monopolistic Competition
Explanation - Individual firms in perfect competition cannot influence price, facing a horizontal (perfectly elastic) demand curve.
Correct answer is: Perfect Competition
Q.24 Which market structure often has barriers like patents or resource ownership?
Perfect Competition
Monopolistic Competition
Monopoly
Oligopoly
Explanation - Monopolies can arise from barriers such as patents, government licenses, or exclusive access to resources.
Correct answer is: Monopoly
Q.25 Which market structure is associated with the concept of 'excess capacity'?
Monopoly
Perfect Competition
Monopolistic Competition
Oligopoly
Explanation - Firms in monopolistic competition often produce less than the output at which average cost is minimized, creating excess capacity.
Correct answer is: Monopolistic Competition