ECON 1002 MICROECONOMICS FINAL EXAM
3 QUESTIONS AND ANSWERS 2026
◉ Four Market Models. Answer: 1. Pure Competition
2. Monopolistic Competition
3. Oligopoly
4. Pure Monopoly
◉ Pure Competition. Answer: the market structure that exists when
there are many small businesses selling one standardized product
- A very large number of firms
- Standardized product
- No control over price
- Very easy entry
- No non-price competition
- Example: Agriculture
Other Characteristics
- Price Takers
- A large number of sellers
,- Easy entry and exit
- Standardized product
◉ Which of the following would best describe why firms in a
perfectly competitive market are price takers?
A) They must take the given price, set by the consumer and previous
firms.
B) The firm takes the price and sets it at a level they wish it to be at.
C) Individual firms have no market power, and their products are
easily substitutable.
D) The market demand curve is perfectly elastic as well, therefore,
the entire market cannot change their price.. Answer: C) Individual
firms have no market power, and their products are easily
substitutable.
◉ Monopolistic Competition. Answer: a market structure in which
many companies sell products that are similar but not identical
- Many firms in the market
- Differentiated products
,- Some control over the price but within narrow limits
- Relatively easy entry
- Considerable emphasis on advertising, brand names, trademarks
for nonprice competition
- Example: Retail Trade, Dresses, Shoes
◉ Oligopoly. Answer: A market structure in which a few large firms
dominate a market
- Few firms in market
- Standardized or differentiated products
- Limited control over price by mutual inter-dependence;
considerable with collusion
- Significant obstacles for entry
- Typically a great deal for nonprice competition, particularly with
product differentiation
- Examples: Steel, Auto, Farm Implements
◉ Pure Monopoly. Answer: A market structure in which one firm
sells a unique product, into which entry is blocked, in which the
single firm has considerable control over product price, and in which
nonprice competition may or may not be found.
- One firm in market
, - Unique products; no close substitutes
- Considerable control over price
- Blocked entry
- Mostly public relations advertising for nonprice competition
- Examples: Local Utilities
◉ Which would best describe perfect competition?
A) One seller, selling a unique product with considerable control
over prices.
B) Many sellers, selling differentiated products, with minimal
control over prices.
C) A large number of sellers, selling standardized products that are
easily substitutable, with zero control over prices.
D) A few sellers, selling a standardized or differentiated product,
with limited control over prices.. Answer: C) A large number of
sellers, selling standardized products that are easily substitutable,
with zero control over prices.
◉ Purely Competitive Demand. Answer: - Perfectly elastic demand
3 QUESTIONS AND ANSWERS 2026
◉ Four Market Models. Answer: 1. Pure Competition
2. Monopolistic Competition
3. Oligopoly
4. Pure Monopoly
◉ Pure Competition. Answer: the market structure that exists when
there are many small businesses selling one standardized product
- A very large number of firms
- Standardized product
- No control over price
- Very easy entry
- No non-price competition
- Example: Agriculture
Other Characteristics
- Price Takers
- A large number of sellers
,- Easy entry and exit
- Standardized product
◉ Which of the following would best describe why firms in a
perfectly competitive market are price takers?
A) They must take the given price, set by the consumer and previous
firms.
B) The firm takes the price and sets it at a level they wish it to be at.
C) Individual firms have no market power, and their products are
easily substitutable.
D) The market demand curve is perfectly elastic as well, therefore,
the entire market cannot change their price.. Answer: C) Individual
firms have no market power, and their products are easily
substitutable.
◉ Monopolistic Competition. Answer: a market structure in which
many companies sell products that are similar but not identical
- Many firms in the market
- Differentiated products
,- Some control over the price but within narrow limits
- Relatively easy entry
- Considerable emphasis on advertising, brand names, trademarks
for nonprice competition
- Example: Retail Trade, Dresses, Shoes
◉ Oligopoly. Answer: A market structure in which a few large firms
dominate a market
- Few firms in market
- Standardized or differentiated products
- Limited control over price by mutual inter-dependence;
considerable with collusion
- Significant obstacles for entry
- Typically a great deal for nonprice competition, particularly with
product differentiation
- Examples: Steel, Auto, Farm Implements
◉ Pure Monopoly. Answer: A market structure in which one firm
sells a unique product, into which entry is blocked, in which the
single firm has considerable control over product price, and in which
nonprice competition may or may not be found.
- One firm in market
, - Unique products; no close substitutes
- Considerable control over price
- Blocked entry
- Mostly public relations advertising for nonprice competition
- Examples: Local Utilities
◉ Which would best describe perfect competition?
A) One seller, selling a unique product with considerable control
over prices.
B) Many sellers, selling differentiated products, with minimal
control over prices.
C) A large number of sellers, selling standardized products that are
easily substitutable, with zero control over prices.
D) A few sellers, selling a standardized or differentiated product,
with limited control over prices.. Answer: C) A large number of
sellers, selling standardized products that are easily substitutable,
with zero control over prices.
◉ Purely Competitive Demand. Answer: - Perfectly elastic demand
