Economic System and Market Structures AFCAT Questions

AFCAT Indian Economy

Economic System and Market Structures MCQ Questions


7.
The term 'pure competition' is most commonly used in economics as an alternative name for:
A.
Monopoly
B.
Monopolistic competition
C.
Oligopoly
D.
Perfect competition
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ANSWER :
D. Perfect competition
8.
In the long run, firms can continue to earn above-normal (supernormal) profits mainly under which of the following market structures, due to significant barriers preventing the entry of new competitors?
A.
Only monopolistic competition
B.
Monopoly and oligopoly
C.
Only perfect competition
D.
Perfect competition and monopolistic competition
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ANSWER :
B. Monopoly and oligopoly
9.
'Mutual interdependence', where each firm must carefully consider how rivals are likely to react to its own pricing and output decisions, is a defining behavioural feature of which market structure?
A.
Perfect competition
B.
Monopoly
C.
Oligopoly
D.
Monopolistic competition
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ANSWER :
C. Oligopoly
10.
A market structure combining a large number of sellers with product differentiation and free entry and exit is best described as:
A.
Perfect competition
B.
Oligopoly
C.
Monopoly
D.
Monopolistic competition
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ANSWER :
D. Monopolistic competition
11.
Under perfect competition, no individual buyer or seller can influence the market price mainly because:
A.
Buyers and sellers are legally barred from negotiating prices
B.
There is a very large number of buyers and sellers, each accounting for an insignificant share of total market transactions
C.
The government strictly fixes all prices in advance
D.
Only one seller is permitted to operate in the market
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ANSWER :
B. There is a very large number of buyers and sellers, each accounting for an insignificant share of total market transactions
12.
A key assumption of perfect competition is that the product sold by every firm in the industry is:
A.
Available only from a single supplier
B.
Highly differentiated through branding
C.
Protected by a patent
D.
Homogeneous, meaning it is identical in every respect to the product sold by every other firm
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ANSWER :
D. Homogeneous, meaning it is identical in every respect to the product sold by every other firm