Market Structures Quiz - CBSE Class 12 Economics
Free practice quiz: Market Structures (CBSE Class 12 Economics). 17 multiple-choice questions with answers and explanations. Play online, no sign-up needed.
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What is the main characteristic of a perfectly competitive market?
- Single seller
- Barriers to entry
- Homogeneous products
- Price maker
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Answer: C. Homogeneous products
In a perfectly competitive market, all firms sell identical products, which is referred to as homogeneous products.
What is the primary motive for firms in a monopoly?
- Maximize market share
- Minimize costs
- Maximize profits
- Provide quality goods
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Answer: C. Maximize profits
In a monopoly, the single seller's primary motive is to maximize profits by setting higher prices and controlling supply.
What is an example of a barrier to entry in a market?
- Low consumer demand
- High market demand
- Government regulations
- Increased competition
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Answer: C. Government regulations
Government regulations can limit entry into a market, serving as a barrier that protects established firms from new competitors.
What happens in the long run in a monopolistically competitive market?
- Economic profits disappear
- Firms are unable to enter the market
- Prices decrease indefinitely
- Firms maximize efficiency
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Answer: A. Economic profits disappear
In the long run, the presence of new firms entering the market erodes economic profits in a monopolistically competitive market.
Which of the following can lead to market failure in monopoly?
- High consumer choice
- Allocative inefficiency
- Increased competition
- Reduced entry barriers
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Answer: B. Allocative inefficiency
Monopolies often lead to allocative inefficiency because they produce less and charge higher prices than would occur in competitive markets.