Unit 3 of 5
Study guide for CLEP CLEP Principles of Microeconomics — Unit 3: Market Structures. Practice questions, key concepts, and exam tips.
82
Practice Questions
16
Flashcards
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Key Topics
Try these 5 questions from this unit. Sign up for full access to all 82.
What type of market structure is characterized by many firms producing a homogeneous product?
Monopoly
Monopolistic competition
Oligopoly
Perfect competition
Monopsony
Answer: D — Perfect competition is correct because perfect competition is characterized by many firms producing a homogeneous product..
Which of the following is a characteristic of oligopoly?
Many firms producing a homogeneous product
One firm producing a unique product
Few firms producing differentiated products
Many buyers and one seller
No barriers to entry
Answer: C — Few firms producing differentiated products is correct because oligopoly is characterized by few firms producing differentiated products..
An oligopoly is characterized by
Many firms and perfect competition
A single seller with no close substitutes
Few firms and significant barriers to entry
Homogeneous products and free entry
Perfectly elastic demand
Answer: C — Few firms and significant barriers to entry is correct because oligopoly involves few firms and significant barriers to entry.
Monopolistically competitive firms
Produce where MR = MC and P = ATC
Sell homogeneous products
Have zero economic profits in long-run equilibrium
Are price takers
Produce where MR = MC and P > ATC
Answer: E — Produce where MR = MC and P > ATC is correct because firms in monopolistic competition maximize where MR = MC and P > ATC.
Which market structure is most likely to lead to a kinked demand curve?
Perfect competition
Monopolistic competition
Oligopoly
Monopoly
Monopsony
Answer: C — Oligopoly is correct because the kinked demand curve model is typically applied to oligopolies.
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