MICROECONOMICS MARKET STRUCTURES EXAM
QUESTIONS AND CORRECT ANSWERS (VERIFIED
ANSWERS) Q&A 2026 |INSTANT DOWNLOAD PDF
1. What defines a perfectly competitive market?
A. Few firms with high barriers
B. One dominant seller
C. Many firms selling identical products
D. Differentiated products
Rationale: Perfect competition has many sellers offering
identical goods with no market power.
Correct answer: C
2. In perfect competition, firms are:
A. Price makers
B. Price takers
C. Monopolists
D. Cartel members
Rationale: Firms accept market price as given.
Correct answer: B
3. Which is NOT a characteristic of perfect competition?
A. Free entry and exit
B. Homogeneous products
,C. Price discrimination
D. Many buyers and sellers
Rationale: Price discrimination is impossible in perfect
competition.
Correct answer: C
4. In the short run, a competitive firm maximizes profit where:
A. MR = MC
B. AR = MC
C. TR = TC
D. P = AVC
Rationale: Profit maximization occurs where marginal revenue
equals marginal cost.
Correct answer: A
5. A monopoly is a market with:
A. Many sellers
B. One seller
C. Few buyers
D. Free entry
Rationale: Monopoly has a single dominant producer.
Correct answer: B
,6. A monopoly can exist due to:
A. Perfect information
B. High competition
C. Barriers to entry
D. Many substitutes
Rationale: Entry barriers prevent competition.
Correct answer: C
7. Monopolistic competition is characterized by:
A. Identical products
B. Differentiated products
C. One seller
D. No competition
Rationale: Firms sell similar but differentiated products.
Correct answer: B
8. Oligopoly is a market with:
A. One firm
B. Many firms
C. Few large firms
D. No firms
Rationale: A small number of dominant firms control the
market.
Correct answer: C
, 9. A key feature of monopolistic competition is:
A. Price-taking behavior
B. Product differentiation
C. No entry
D. Collusion always
Rationale: Firms differentiate products to gain market power.
Correct answer: B
10. In the long run, perfect competition leads to:
A. Economic profit
B. Normal profit
C. Monopoly profit
D. Supernormal loss
Rationale: Entry and exit eliminate abnormal profits.
Correct answer: B
11. Which market structure has the highest barriers to entry?
A. Perfect competition
B. Monopoly
C. Monopolistic competition
D. Contestable markets
QUESTIONS AND CORRECT ANSWERS (VERIFIED
ANSWERS) Q&A 2026 |INSTANT DOWNLOAD PDF
1. What defines a perfectly competitive market?
A. Few firms with high barriers
B. One dominant seller
C. Many firms selling identical products
D. Differentiated products
Rationale: Perfect competition has many sellers offering
identical goods with no market power.
Correct answer: C
2. In perfect competition, firms are:
A. Price makers
B. Price takers
C. Monopolists
D. Cartel members
Rationale: Firms accept market price as given.
Correct answer: B
3. Which is NOT a characteristic of perfect competition?
A. Free entry and exit
B. Homogeneous products
,C. Price discrimination
D. Many buyers and sellers
Rationale: Price discrimination is impossible in perfect
competition.
Correct answer: C
4. In the short run, a competitive firm maximizes profit where:
A. MR = MC
B. AR = MC
C. TR = TC
D. P = AVC
Rationale: Profit maximization occurs where marginal revenue
equals marginal cost.
Correct answer: A
5. A monopoly is a market with:
A. Many sellers
B. One seller
C. Few buyers
D. Free entry
Rationale: Monopoly has a single dominant producer.
Correct answer: B
,6. A monopoly can exist due to:
A. Perfect information
B. High competition
C. Barriers to entry
D. Many substitutes
Rationale: Entry barriers prevent competition.
Correct answer: C
7. Monopolistic competition is characterized by:
A. Identical products
B. Differentiated products
C. One seller
D. No competition
Rationale: Firms sell similar but differentiated products.
Correct answer: B
8. Oligopoly is a market with:
A. One firm
B. Many firms
C. Few large firms
D. No firms
Rationale: A small number of dominant firms control the
market.
Correct answer: C
, 9. A key feature of monopolistic competition is:
A. Price-taking behavior
B. Product differentiation
C. No entry
D. Collusion always
Rationale: Firms differentiate products to gain market power.
Correct answer: B
10. In the long run, perfect competition leads to:
A. Economic profit
B. Normal profit
C. Monopoly profit
D. Supernormal loss
Rationale: Entry and exit eliminate abnormal profits.
Correct answer: B
11. Which market structure has the highest barriers to entry?
A. Perfect competition
B. Monopoly
C. Monopolistic competition
D. Contestable markets
