ECON 110 Lecture Notes - Lecture 18: Monopolistic Competition, Nash Equilibrium, Market Structure

1. Which of the following is a characteristic of pure monopoly?

A. close substitute products

B. barriers to entry

C. the absence of market power

D. "price taking"

2. An example of a monopoly would be

A. one of many U.S. wheat farmers

B. one of the few U.S. automakers

C. AT&T cell phone service

D. the local water company

3. In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

A. monopoly

B. oligopoly

C. only perfect competition

D. only monopolistic competition

E. both perfect competition and monopolistic competition

4. Which of the following is the best example of a perfectly competitive market?

A. farming

B. diamonds

C. athletic shoes

D. soft drinks

E. electricity distribution

Think about a firm that you have done business with recently. What industry does this firm belong to?

For example, McDonald's is a firm in the fast-food industry. What market structure would this industry fall under? What are the names of other firms in this industry? Is it a monopolistic competition, oligopoly, monopoly, or perfect competition? Justify your classification of the firm. Use the characteristics/features of the different market structures to determine which market structure to classify your chosen firm.