Unit 2.11: Market structures review sheet (HL only)

Review of terms for unit 2.11: Market structures

I have included this page, which contains a PDF handout as a simple revision exercise.  I find that many IB students get a degree of comfort from these short summary handouts.

1. Complete the sentences by filling in the following blanks:

The assumptions of        include: Many sellers and    , each too small to influence the market supply / demand and hence market    .  All firms sell the same     (identical) product, hence no        .   Perfect     for both buyers and sellers.

price  homogenous  perfect  buyers  knowledge  loyalty  competition  brand 

 

 

2. Complete the sentences by filling in the following blanks:

In the     run all firms in perfect competition make     profit because of freedom of     and     into and out of the industry.

 short  exit  normal  entry  firms  long 

 

 

3. Complete the sentences by filling in the following blanks:

All firms in perfect competition are     efficient in both the short and long run because they produce where   = MC.

 AR  AC  allocatively  MR 

 

 

4. Complete the sentences by filling in the following blanks:

In the long run perfectly competitive firms will also be    efficient because each firm will be producing where     =    .  In the short run they may not be    efficient.

 MC  AC  MR  productively  productively AR 

 

 

5. Complete the sentences by filling in the following blanks:

The following are all sources of monopoly power –   of scale, natural    , legal barriers and brand   .

 loyalty  economies  diseconomies  monopolies  returns to scale 

 

 

6. Complete the sentences by filling in the following blanks:

Many governments throughout the world consider any business which controls at least    % market share to be a monopoly?

25  50  100 

 

 

7. Complete the sentences by filling in the following blanks:

One clear advantage of a perfectly competitive firm is that in situations where the monopolist is not receiving significant             the chances of the     being exploited are lower.

economies  of   diseconomies  increasing returns  scale  consumer 

 

 

8. Complete the sentences by filling in the following blanks:

Another disadvantage of         markets is that firms do not have the incentive to innovate or add additional features to the product.

 perfectly  imperfectly  competitive 

 

 

9. Complete the sentences by filling in the following blanks:

A firm will maximise profits at where    =   , maximise revenue at where    =   and unit sales at where AR=  .

MR  AR  0  AC  greater than MC  MR  MC

 

 

10. Complete the sentences by filling in the following blanks:

The difference between firms in         and perfect competition is that in the former the goods and services sold are very similar but not homogenous.  They are also neither     or allocatively efficient in the       .

productively  short  long  run  monopolistic  monopoly  competition

 

11. Complete the sentences by filling in the following blanks:

within monopolistc competition is caused by the brand     of customers in the market, rather than any attempt by the firms to restrict supply to force up prices.

Efficiency  Inefficiency  loyalty 

 

 

12. Complete the sentences by filling in the following blanks:

An     is a market structure where a small handful of firms dominate the industry, generally between    and 8.  However more significant than the number of firms within the industry is the    ratio.

2  concentration  oligopoly  monopoly 

 

 

13. Complete the sentences by filling in the following blanks:

All firms within an oligopoly share an     relationship.  This means that each firm moves only after first carefully considering their opponents response to such a move.

interdependent  independent  cooperative 

 

 

14. Complete the sentences by filling in the following blanks:

Firms in oligopoly have   prices and the AR curve is sometimes called a demand curve.

kinked  sticky  fixed  vertical 

 

 

15. Complete the sentences by filling in the following blanks:

A strategy is one that is always better than any other strategy, regardless of any other firms actions.

cooperative  dominant 

 

 

16. Complete the sentences by filling in the following blanks:

Firms in regularly ignore the     placement level and set up right next to each other, so that they keep an eye on what their competitors are doing.

oligopoly  monopoly  optimum  productively  socially 

 

 

17. Complete the sentences by filling in the following blanks:

 collusion involves firms openly colluding with each other.    is more secret collusion.

Covert  Overt  Tacit 

 

 

18. Complete the sentences by filling in the following blanks:

 collusion is non official collusion exits when firms within the same industry set standardised practices making competition more difficult.

Covert  Overt  Tacit 

 

 

19. Complete the sentences by filling in the following blanks:

Vouchers, loyalty points, customer service and product diffferentiation are examples of    -      .

competitive  non  price  competition 

 

 

20. Complete the sentences by filling in the following blanks:

      involves a firm charging different     to different groups of people for the same good or service.

Price  prices  non-price  discrimination First degree  

 

 

Total Score:

The review sheet is available as a PDF file at:  Review sheet

All materials on this website are for the exclusive use of teachers and students at subscribing schools for the period of their subscription. Any unauthorised copying or posting of materials on other websites is an infringement of our copyright and could result in your account being blocked and legal action being taken against you.