Microeconomics: 2026 Market Structures
Study Guide
Perfect Competition, Monopoly, Oligopoly & Game Theory (100 Questions)
1. What are the four primary market structures in microeconomics?
A) Perfect competition, Monopoly, Oligopoly, Monopolistic competition
B) Supply, Demand, Equilibrium, Shortage
C) Inflation, Unemployment, GDP, Growth
D) Revenue, Cost, Profit, Loss
Correct Answer: A) Perfect competition, Monopoly, Oligopoly, Monopolistic competition
2. In a "Perfect Competition" market, how much control does an individual firm have over
the market price?
A) Complete control
B) Significant control
C) No control (they are price takers)
D) Some control through advertising
Correct Answer: C) No control (they are price takers)
3. Which of the following is NOT a characteristic of perfect competition?
A) Many buyers and sellers
B) Identical (homogeneous) products
C) Barriers to entry
D) Perfect information
Correct Answer: C) Barriers to entry
4. A "Monopoly" exists when:
A) There are many sellers of a product
B) There is only one seller of a product with no close substitutes
C) Two companies dominate the market
D) The government sets all prices
Correct Answer: B) There is only one seller of a product with no close substitutes
5. What is a "Natural Monopoly"?
A) A monopoly that happens in nature (e.g., farming)
B) A market where a single firm can supply the entire market at a lower cost than two or more
firms
,C) A monopoly created by the government for profit
D) A monopoly that disappears naturally over time
Correct Answer: B) A market where a single firm can supply the entire market at a lower
cost than two or more firms
6. In "Monopolistic Competition," firms differentiate their products by:
A) Pricing them exactly the same as competitors
B) Using branding, quality, style, and marketing to make products slightly different
C) Avoiding advertising
D) Selling only to the government
Correct Answer: B) Using branding, quality, style, and marketing to make products
slightly different
7. What characterizes an "Oligopoly"?
A) Many small sellers
B) A market dominated by a few large firms
C) Only one seller
D) Perfectly identical products
Correct Answer: B) A market dominated by a few large firms
8. The "Prisoner's Dilemma" is a classic concept in:
A) Microeconomic supply theory
B) Game Theory
C) Monopoly regulation
D) Perfect competition analysis
Correct Answer: B) Game Theory
9. In the Prisoner's Dilemma, why do rational players often choose a sub-optimal
outcome?
A) Because they want to help each other
B) Because they prioritize individual gain without knowing the other player's choice, leading to
the Nash Equilibrium
C) Because the game is too complex to understand
D) Because they are forced by the government
Correct Answer: B) Because they prioritize individual gain without knowing the other
player's choice, leading to the Nash Equilibrium
10. What is a "Price Taker"?
A) A firm that sets the market price
, B) A firm that must accept the market price determined by supply and demand
C) A buyer who negotiates every price
D) A government agency that sets prices
Correct Answer: B) A firm that must accept the market price determined by supply and
demand
11. What is a "Price Maker"?
A) A firm that has power to influence the market price (e.g., a monopolist)
B) A consumer who decides how much to pay
C) A firm in perfect competition
D) A person who works at the mint
Correct Answer: A) A firm that has power to influence the market price (e.g., a
monopolist)
12. "Barriers to Entry" include all of the following EXCEPT:
A) Patents and copyrights
B) High startup costs
C) Ease of finding suppliers
D) Control of essential resources
Correct Answer: C) Ease of finding suppliers
13. "Price Discrimination" is:
A) Charging different customers different prices for the same product based on their willingness
to pay
B) Lowering prices for everyone
C) Setting a fixed price for all regions
D) Refusing to sell to certain customers
Correct Answer: A) Charging different customers different prices for the same product
based on their willingness to pay
14. A "Cartel" is an illegal agreement in an oligopoly to:
A) Improve product quality
B) Fix prices or restrict output to increase profits
C) Donate money to charity
D) Lower prices for consumers
Correct Answer: B) Fix prices or restrict output to increase profits
15. What is "Product Differentiation"?
A) The process of making a product look exactly like a competitor's
Study Guide
Perfect Competition, Monopoly, Oligopoly & Game Theory (100 Questions)
1. What are the four primary market structures in microeconomics?
A) Perfect competition, Monopoly, Oligopoly, Monopolistic competition
B) Supply, Demand, Equilibrium, Shortage
C) Inflation, Unemployment, GDP, Growth
D) Revenue, Cost, Profit, Loss
Correct Answer: A) Perfect competition, Monopoly, Oligopoly, Monopolistic competition
2. In a "Perfect Competition" market, how much control does an individual firm have over
the market price?
A) Complete control
B) Significant control
C) No control (they are price takers)
D) Some control through advertising
Correct Answer: C) No control (they are price takers)
3. Which of the following is NOT a characteristic of perfect competition?
A) Many buyers and sellers
B) Identical (homogeneous) products
C) Barriers to entry
D) Perfect information
Correct Answer: C) Barriers to entry
4. A "Monopoly" exists when:
A) There are many sellers of a product
B) There is only one seller of a product with no close substitutes
C) Two companies dominate the market
D) The government sets all prices
Correct Answer: B) There is only one seller of a product with no close substitutes
5. What is a "Natural Monopoly"?
A) A monopoly that happens in nature (e.g., farming)
B) A market where a single firm can supply the entire market at a lower cost than two or more
firms
,C) A monopoly created by the government for profit
D) A monopoly that disappears naturally over time
Correct Answer: B) A market where a single firm can supply the entire market at a lower
cost than two or more firms
6. In "Monopolistic Competition," firms differentiate their products by:
A) Pricing them exactly the same as competitors
B) Using branding, quality, style, and marketing to make products slightly different
C) Avoiding advertising
D) Selling only to the government
Correct Answer: B) Using branding, quality, style, and marketing to make products
slightly different
7. What characterizes an "Oligopoly"?
A) Many small sellers
B) A market dominated by a few large firms
C) Only one seller
D) Perfectly identical products
Correct Answer: B) A market dominated by a few large firms
8. The "Prisoner's Dilemma" is a classic concept in:
A) Microeconomic supply theory
B) Game Theory
C) Monopoly regulation
D) Perfect competition analysis
Correct Answer: B) Game Theory
9. In the Prisoner's Dilemma, why do rational players often choose a sub-optimal
outcome?
A) Because they want to help each other
B) Because they prioritize individual gain without knowing the other player's choice, leading to
the Nash Equilibrium
C) Because the game is too complex to understand
D) Because they are forced by the government
Correct Answer: B) Because they prioritize individual gain without knowing the other
player's choice, leading to the Nash Equilibrium
10. What is a "Price Taker"?
A) A firm that sets the market price
, B) A firm that must accept the market price determined by supply and demand
C) A buyer who negotiates every price
D) A government agency that sets prices
Correct Answer: B) A firm that must accept the market price determined by supply and
demand
11. What is a "Price Maker"?
A) A firm that has power to influence the market price (e.g., a monopolist)
B) A consumer who decides how much to pay
C) A firm in perfect competition
D) A person who works at the mint
Correct Answer: A) A firm that has power to influence the market price (e.g., a
monopolist)
12. "Barriers to Entry" include all of the following EXCEPT:
A) Patents and copyrights
B) High startup costs
C) Ease of finding suppliers
D) Control of essential resources
Correct Answer: C) Ease of finding suppliers
13. "Price Discrimination" is:
A) Charging different customers different prices for the same product based on their willingness
to pay
B) Lowering prices for everyone
C) Setting a fixed price for all regions
D) Refusing to sell to certain customers
Correct Answer: A) Charging different customers different prices for the same product
based on their willingness to pay
14. A "Cartel" is an illegal agreement in an oligopoly to:
A) Improve product quality
B) Fix prices or restrict output to increase profits
C) Donate money to charity
D) Lower prices for consumers
Correct Answer: B) Fix prices or restrict output to increase profits
15. What is "Product Differentiation"?
A) The process of making a product look exactly like a competitor's
