True/False
Indicate whether the sentence or statement is true
or false. |
| | 1. | Competition
is advantageous because it provides consumers with choices. |
| | 2. | The most
common market structure in the United States is perfect competition. |
| | 3. | In a
perfectly competitive market, buyers control the price. |
| | 4. | An increase
in available information about prices and quality makes an economy more competitive. |
| | 5. | The
agriculture industry in the United States is an example of almost perfect competition. |
Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question. |
| | 6. | In perfect
competition, prices are controlled by a. | supply and demand. | c. | buyers. | b. | sellers. | d. | government. | | | | |
|
| | 7. | For perfect
competition to take place, the goods being sold must a. | have few
buyers. | c. | be
similar. | b. | have few sellers. | d. | be difficult to produce. | | | | |
|
| | 8. | The increase
of information available on the World Wide Web has a. | not affected the
economy. | c. | created perfect
competition. | b. | made the economy more competitive. | d. | made the economy less competitive. | | | | |
|
| | 9. | The industry
in the United States that most closely approaches perfect competition is a. | communications. | c. | transportation. | b. | mining. | d. | agriculture. | | | | |
|
| | 10. | How does
perfect competition affect society? a. | consumers overpay for products they buy | b. | consumers cannot buy
the products they want | c. | industries are economically inefficient | d. | prices are forced down
to cover the costs of production plus a small profit | | |
|
| | 11. | The most
extreme form of imperfect competition is a. | oligopoly. | c. | monopolistic competition. | b. | cartel. | d. | pure
monopoly. | | | | |
|
| | 12. | Which of the
following is a characteristic of a pure monopoly? a. | many sellers of the good or service | b. | many substitutes for
the good or service being sold | c. | only one seller of the good or service | d. | no barriers to
entry | | |
|
| | 13. | A company
with exclusive rights to provide a public good or service is a a. | natural
monopoly. | c. | technological
monopoly. | b. | geographic monopoly. | d. | government monopoly. | | | | |
|
| | 14. | In which of
the following market structures is advertising most important? a. | pure
monopoly | c. | monopolistic
competition | b. | oligopoly | d. | cartel | | | | |
|
| | 15. | In
monopolistic competition, a. | businesses compete by product differentiation and
advertising. | b. | there is only one seller of the good or
service. | c. | each seller sells exactly the same product. | d. | sellers have no control
over prices. | | |
|
| | 16. | One goal of
government in the United States has been to a. | protect monopolies. | b. | encourage competition
in the economy. | c. | promote mergers. | d. | discourage competition
in the economy. | | |
|
| | 17. | The practice
of creating interlocking directorates a. | increased competition among corporations. | b. | was ended by John D.
Rockefeller. | c. | forced monopolies to break up. | d. | was outlawed by the
Clayton Act. | | |
|
| | 18. | Most
antitrust legislation restricts the harmful effects of a. | competition. | c. | advertising. | b. | mergers. | d. | trade. | | | | |
|
| | 19. | A paper
company merging with an office supply company is an example of a(n) a. | interlocking
directorate. | c. | horizontal
merger. | b. | conglomerate. | d. | vertical merger. | | | | |
|
| | 20. | Which
federal regulatory agency regulates the sale of stocks, bonds, and other
investments? a. | Securities and Exchange
Commission | c. | Food and Drug
Administration | b. | Department of the Treasury | d. | Federal Trade Commission | | | | |
|
Completion
Complete each sentence or
statement. |
| 21. | A
____________________ is an arrangement among groups of industrial businesses to reduce international
competition by controlling price, production, and distribution of goods.
|
| 22. | Government
regulations, large initial investment, and ownership of raw materials are
____________________.
|
| 23. | The most
common form of market structure in the United States is _________________________.
|
| 24. | A
____________________ gives an inventor a technological monopoly over an invention.
|
| 25. | ____________________ make it possible for natural monopolies to produce the largest
amount for the lowest cost.
|
| 26. | Laws enacted
to prevent new monopolies from forming and to break up those that exist are known as
____________________.
|
| 27. | Corporations
that are involved in at least four or more unrelated businesses are called
____________________.
|
| 28. | The Federal
Trade Commission is the ____________________ that regulates product warranties, unfair methods of
competition in interstate commerce, and fraud in advertising.
|
| 29. | ____________________ is the gradual reduction in government control over business
activity.
|
| 30. | The federal
government outlawed _________________________ among corporations.
|
Matching |
| | Match
each item with the correct statement below. a. | market structure | b. | perfect
competition | c. | large market | d. | easy entry and
exit | e. | equilibrium
price | | |
|
| | 31. | situation in
which numerous buyers and sellers exist for a product |
| | 32. | only price
at which quantity demanded equals quantity supplied |
| | 33. | situation in
which the initial costs of investment are small |
| | 34. | market
situation in which no single buyer or seller can affect price |
| | 35. | extent to
which competition prevails in particular markets |
| | Match
each item with the correct statement below. a. | monopoly | b. | patent | c. | copyright | d. | oligopoly | e. | cartel | | |
|
| | 36. | industry
dominated by a few suppliers who exercise some control over price |
| | 37. | arrangement
among groups of industrial businesses to reduce international competition |
| | 38. | author's
right to sell, publish, or reproduce his or her works for a specified number of years |
| | 39. | market
situation in which a single supplier makes up an entire industry |
| | 40. | inventor's
exclusive right to make, use, or sell an invention for a specified number of years |
| | Match
each item with the correct statement below. a. | interlocking directorate | b. | antitrust
legislation | c. | merger | d. | conglomerate | e. | deregulation | | |
|
| | 41. | combined
company that results when one corporation buys more than half the stock of another
corporation |
| | 42. | large
corporation made up of smaller corporations dealing in unrelated businesses |
| | 43. | reduction of
government control over business activity |
| | 44. | board of
directors with members who also serve as the board of directors of a competing
corporation |
| | 45. | laws that
prevent new monopolies from forming and break up those that exist |