1. When consumers become more price sensitive and the demand
for a product decreases, what does this indicate about the market?
A. The market is in perfect competition
B. The market is a monopoly
C. The market is in monopolistic competition
D. The market is an oligopoly
Correct Answer: A. The market is in perfect competition
Rationale: In a perfectly competitive market, consumers have
many choices and can easily switch between products based on
price.
2. In a monopoly market, how does the demand curve compare to
a perfectly competitive market?
A. The demand curve is downward sloping in both markets
B. The demand curve is perfectly elastic in a monopoly market
C. The demand curve is perfectly elastic in a perfectly
competitive market
D. The demand curve is upward sloping in a monopoly market
Correct Answer: A. The demand curve is downward sloping in
both markets
Rationale: In both monopoly and perfect competition markets, the
demand curve slopes downward because as price decreases,
quantity demanded increases.
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