CXC CXC - Caribbean Examinations Council Economics: Market Structures

Question 1

Which market structure is characterized by a single seller controlling the entire supply of a good or service with no close substitutes?

Accepted Answer

Monopoly

Answer

Perfect competition

Answer

Oligopoly

Answer

Monopolistic competition

Question 2

In a perfectly competitive market, what happens to a firm's economic profit in the long run?

Accepted Answer

It is driven to zero by new entrants

Answer

It increases indefinitely

Answer

It remains constant

Answer

It becomes negative

Question 3

Which characteristic distinguishes an oligopoly from other market structures?

Accepted Answer

A few large firms with significant market power

Answer

Many sellers with identical products

Answer

A single dominant firm

Answer

Free entry and exit for all firms

Question 4

What is a natural monopoly?

Accepted Answer

A market where one firm can supply the entire market more cheaply than multiple firms

Answer

A monopoly formed through government regulation

Answer

A monopoly based on owning a natural resource

Answer

A market with naturally identical products

Question 5

Which of the following is an example of non-price competition?

Accepted Answer

Advertising and product differentiation

Answer

Lowering the price below competitors

Answer

Offering quantity discounts

Answer

Reducing production costs

Question 6

What does the term 'price maker' describe in market structures?

Accepted Answer

A firm with the power to set its own price

Answer

A firm that accepts the market price as given

Answer

A government agency that controls prices

Answer

A consumer who influences market prices