Market Structures Quiz - CBSE Class 12 Economics

Free practice quiz: Market Structures (CBSE Class 12 Economics). 17 multiple-choice questions with answers and explanations. Play online, no sign-up needed.

This CBSE Class 12 Economics practice quiz has 17 multiple-choice questions on Market Structures, and 17 of them come with an explanation. Try the 5 sample questions below (tap an option to check yourself), then play the full quiz online. No sign-up needed.

Sample questions

1. What is the main characteristic of a perfectly competitive market?

   1. Single seller
   2. Barriers to entry
   3. Homogeneous products
   4. Price maker
   Show answer

   Answer: C. Homogeneous products

   In a perfectly competitive market, all firms sell identical products, which is referred to as homogeneous products.

2. What is the primary motive for firms in a monopoly?

   1. Maximize market share
   2. Minimize costs
   3. Maximize profits
   4. Provide quality goods
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   Answer: C. Maximize profits

   In a monopoly, the single seller's primary motive is to maximize profits by setting higher prices and controlling supply.

3. What is an example of a barrier to entry in a market?

   1. Low consumer demand
   2. High market demand
   3. Government regulations
   4. Increased competition
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   Answer: C. Government regulations

   Government regulations can limit entry into a market, serving as a barrier that protects established firms from new competitors.

4. What happens in the long run in a monopolistically competitive market?

   1. Economic profits disappear
   2. Firms are unable to enter the market
   3. Prices decrease indefinitely
   4. Firms maximize efficiency
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   Answer: A. Economic profits disappear

   In the long run, the presence of new firms entering the market erodes economic profits in a monopolistically competitive market.

5. Which of the following can lead to market failure in monopoly?

   1. High consumer choice
   2. Allocative inefficiency
   3. Increased competition
   4. Reduced entry barriers
   Show answer

   Answer: B. Allocative inefficiency

   Monopolies often lead to allocative inefficiency because they produce less and charge higher prices than would occur in competitive markets.

More questions in this quiz

Answers and explanations are in the full quiz.

1. Which of the following is NOT a characteristic of perfect competition?
2. Which market structure is defined by a few firms that dominate the market?
3. Under what condition will a firm continue to operate in the short run, even if it is incurring losses?
4. Which market structure is characterized by product differentiation?
5. In a monopoly, how does the demand curve faced by the firm compare to the market demand curve?
6. What occurs when two firms in an oligopoly engage in collusion?
7. Which of the following is a feature of an oligopolistic market?
8. How does a natural monopoly arise?
9. In which market type do firms compete mainly on non-price features?
10. What is the effect of advertisements in monopolistic competition?
11. What signals a firm to enter a profitable market?
12. What is the primary outcome of price discrimination by a monopolist?

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