1. Directions

You will read passages on the topic and then answer questions about them. You may find vocabulary at the end of the test. Read the questions carefully before choosing the correct answers.

2. Questions of the test

Question 1. What type of market competition occurs when there are many small businesses offering similar products or services, and no one business has significant market power?
A) Perfect competition
B) Monopoly
C) Oligopoly
D) Monopolistic competition

Question 2. What type of market competition refers to a market in which there is only one seller offering a particular product or service?
A) Perfect competition
B) Monopoly
C) Oligopoly
D) Monopolistic competition

Question 3. What type of market competition occurs when there are only a few large businesses that sell similar products or services?
A) Perfect competition
B) Monopoly
C) Oligopoly
D) Monopolistic competition

Question 4. What type of market competition occurs when there are many businesses offering similar products or services, but each business has a unique selling proposition that sets it apart from its competitors?
A) Perfect competition
B) Monopoly
C) Oligopoly
D) Monopolistic competition

Question 5. In a market with monopolistic competition, how do businesses typically set their prices?
A) By setting a price that is higher than their marginal cost
B) By setting a price that is lower than their marginal cost
C) By setting a price that is equal to their marginal cost
D) By setting a price that is equal to the average total cost of production