Tackle the Test: Free-Response Questions

1. Question

   For each of the following characteristics, indicate which market structure(s) exhibit that characteristic.

   
   

   
   

   1. many sellers

      
      
   
   

   2. price-takers

      
      
   
   

   3. barriers to entry

      
      
   
   

   4. differentiated product

      
      
   
   

   Rubric for FRQ 1 (7 points)

   1. 1 point: perfect competition

      1 point: monopolistic competition

   2. 1 point: perfect competition

   3. 1 point: monopoly

      1 point: oligopoly

   4. 1 point: oligopoly

      1 point: monopolistic competition

2. Question

   
   

   1. Draw a correctly labeled graph of a perfectly competitive firm’s demand curve if the market price is $10.

      
      
   
   

   2. What does the firm’s marginal revenue equal any time it sells one more unit of its output? (3 points)

      
      
   
   

   Rubric for FRQ 2 (5 points)

   

   1 point: A graph with “Price,” “P,” or “Dollars per unit” on the vertical axis and “Quantity” or “Q” on the horizontal axis

   1 point: A horizontal demand curve at a height of $10

   1 point: $10