AP Microeconomics Market Structures

Question 1

Which of the following is a characteristic of perfect competition?

Accepted Answer

Firms are price takers

Answer

Firms produce differentiated products

Answer

There are significant barriers to entry

Answer

There is only one seller in the market

Question 2

What is the key difference between monopolistic competition and perfect competition?

Accepted Answer

The level of product differentiation

Answer

The number of firms in the market

Answer

The presence of barriers to entry

Answer

The ability to set prices

Question 3

In a monopoly, the marginal revenue curve:

Accepted Answer

Lies below the demand curve

Answer

Lies above the demand curve

Answer

Coincides with the demand curve

Answer

Is perfectly elastic

Question 4

What is a dominant strategy in game theory?

Accepted Answer

A strategy that is the best choice regardless of the opponent’s action

Answer

A strategy that guarantees the highest payoff for all players

Answer

A strategy chosen by firms in perfect competition

Answer

A strategy that maximizes joint profit in a duopoly

Question 5

Which of the following is true in a monopolistic competition market in the long run?

Accepted Answer

Firms earn zero economic profit

Answer

Firms earn economic profits

Answer

Firms operate at the lowest point of their average total cost curve

Answer

Firms produce where price equals marginal cost