Imperfect Competition

1. The demand for which good is most likely to be inelastic?

a. caviar

b. milk

c. yacht

d. a vacation in the Bahamas

2. John likes to chew one piece of gum each day. The gum costs only a tiny fraction of his weekly budget. The company that makes his favorite gum doubles its prices. What will John do?

a. buy a cheaper brand

b. pay the doubled cost

c. give up chewing gum

d. try many different brands

3. In a perfectly competitive market, how much control over prices do companies have?

a. none

b. very little

c. some

d. total control

4. What kind of market runs most efficiently when one large firm supplies all of the output?

a. a natural monopoly

b. a network

c. a perfect competition

d. an imperfect competition