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Competitive Markets quiz #4

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  • The competitive threat that outsiders will enter a market is weaker when
    Barriers to entry are high.
  • Low-cost leaders who have the lowest industry costs are likely to
    Offer products at lower prices and gain market share.
  • Focused low-cost strategy
    Targets a specific market segment with lower prices.
  • Why do single firms in perfectly competitive markets face horizontal demand curves?
    Because they are price takers and can sell any quantity at the market price.
  • What is a characteristic of perfectly competitive markets?
    Identical products.
  • A perfectly competitive firm will continue producing in the short run as long as it can cover its:
    Variable costs.
  • In perfect competition, long-run equilibrium occurs when the economic profit is
    Zero.
  • A low-cost leader's basis for competitive advantage is
    Lower production costs.
  • When small businesses compete with large firms, a main disadvantage is
    Less ability to achieve economies of scale.
  • In a product market, different organizations have different target customer markets.
    True.
  • Because perfectly competitive firms are price takers, the marginal revenue is equal to the market
    Price.
  • At the shutdown point, the price is equal to the average cost.
    False. At the shutdown point, price equals average variable cost.
  • A competitive environment where there is strong rivalry among sellers
    Leads to lower prices and more choices for consumers.
  • The firm should produce in the short run as long as the price
    Is greater than or equal to average variable cost.
  • Consumers typically compare a firm's products and prices with those offered by
    Competitors.
  • Why do single firms in perfectly competitive markets face horizontal demand curves?
    Because they cannot influence the market price.
  • In pure competition, producers compete exclusively on the basis of
    Price.
  • A car dealer who does not have enough customers for a supply of new cars faces
    Excess inventory and lower profits.
  • Competition happens when two or more businesses
    Strive to attract the same customers.
  • In a market or free enterprise economy, competition ensures
    Efficient allocation of resources and better products.
  • Choose those characteristics that best describe a command system.
    Centralized decision-making and government control of resources.
  • A key characteristic of a competitive market is that
    No single buyer or seller can influence the price.
  • Dollar Tree and low-cost air carriers are examples of the following business model:
    Low-cost leadership.
  • A retailer is an example of a(n)
    Seller in the product market.
  • Product/market fit occurs when a business
    Meets the needs of its target customers.
  • Is the type of competition that occurs in a competitive market without identical producers.
    Monopolistic competition.
  • In-store hiring kiosks save employers money by reducing hiring costs.
    True.
  • A company that can offer a product at a much lower price due to some advantage holds
    A competitive advantage.
  • The product market is the place where
    Goods and services are exchanged between buyers and sellers.
  • Stone and brick are substitutes in home construction.
    True.
  • A product being in great demand is a factor that might encourage businesses to
    Enter the market.
  • The representative firm in a purely competitive industry:
    Is a price taker and sells identical products.
  • In the competitive market for figure skate blades, manufacturers offer an array of products that are
    Likely differentiated, so not perfectly competitive.
  • In a competitive market sellers choose
    How much to produce, but not the price.
  • How does market segmentation provide value to marketers?
    It allows targeting specific groups for more effective marketing.
  • In a capitalist economy, greater competition directly benefits
    Consumers.
  • A market that is driven by supply and demand is controlled by
    Buyers and sellers.
  • Adam Smith suggests that increased competition will allow prices to be kept
    Low and fair.
  • In a perfectly competitive market, we assume the product is identical in the minds of
    Consumers.
  • Prices similar to competitors with a small variation
    Indicate competitive pricing.