Online Test — Perfect Competition and Price Determination
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
In economics, a market is any arrangement where buyers and sellers:
Fight
Come into contact to exchange goods
Only store goods
Pay taxes only
Explanation: A market is any contact between buyers and sellers to exchange goods.
Question 2 of 15
Which is NOT a main market structure?
Perfect competition
Monopoly
Oligopoly
Equilibrium
Explanation: Equilibrium is a market outcome, not a market structure.
Question 3 of 15
Under perfect competition, the product is:
Homogeneous (identical)
Branded
Unique
Differentiated
Explanation: Perfect competition has a homogeneous product.
Question 4 of 15
A perfectly competitive firm is a:
Price maker
Price taker
Monopolist
Leader
Explanation: Each firm is too small to affect price — a price taker.
Question 5 of 15
A feature of perfect competition is:
Free entry and exit of firms
One seller only
Branded goods
Government control
Explanation: Free entry and exit is a feature of perfect competition.
Question 6 of 15
In a competitive market, the price is determined by:
A single firm
Market demand and supply
The government always
One buyer
Explanation: Price is set by the interaction of total demand and supply.
Question 7 of 15
Equilibrium price is where quantity demanded equals quantity:
Supplied
Produced
Stocked
Taxed
Explanation: At equilibrium, quantity demanded = quantity supplied.
Question 8 of 15
At equilibrium, the market has:
A shortage
A surplus
Neither shortage nor surplus
No buyers
Explanation: The market clears — no shortage or surplus.
Question 9 of 15
At a price above equilibrium, there is a:
Shortage
Surplus
Balance
Tax
Explanation: Above equilibrium, supply exceeds demand — a surplus.
Question 10 of 15
At a price below equilibrium, there is a:
Surplus
Shortage
Balance
No effect
Explanation: Below equilibrium, demand exceeds supply — a shortage.
Question 11 of 15
If demand increases and supply is unchanged, equilibrium price:
Rises
Falls
Stays the same
Becomes zero
Explanation: More demand raises both equilibrium price and quantity.
Question 12 of 15
A government-set maximum price below equilibrium is a:
Price floor
Price ceiling
Tax
Subsidy
Explanation: A maximum price below equilibrium is a price ceiling.
Question 13 of 15
A price ceiling causes a:
Surplus
Shortage
Balance
Higher supply
Explanation: Below equilibrium, demand exceeds supply — a shortage.
Question 14 of 15
A government-set minimum price above equilibrium is a:
Price ceiling
Price floor
Black market
Ration
Explanation: A minimum price above equilibrium is a price floor.
Question 15 of 15
The minimum support price (MSP) for crops is an example of a:
Price ceiling
Price floor
Tax
Subsidy
Explanation: MSP is a price floor that protects farmers.