Lesson 4.1.5.8
4.1.5.8 The dynamics of competition and competitive market processes Quiz: AQA Economics, Unit 1
20 questions
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Lesson 4.1.5.8, The dynamics of competition and competitive market processes: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.
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The 20 questions
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Apart from lowering prices, how do competitive firms primarily compete for buyers?
- Improving product quality
- Restricting total output
- Raising entry barriers
- Collusive price fixing
-
Which outcome is a major short-run benefit of market competition for consumers?
- Increased market concentration
- Collusive pricing
- Higher entry barriers
- Lower prices
-
Which outcome is a primary long-run benefit of market competition?
- Natural monopoly
- Allocative inefficiency
- Predatory pricing
- Dynamic efficiency
-
What action is an incumbent firm most likely to take when threatened by potential new entrants?
- Increase product prices
- Invest in innovation
- Abandon market share
- Reduce total output
-
According to Schumpeter, what process describes new firms innovating to overcome barriers and displace monopolists?
- Regulatory capture
- Creative destruction
- Price discrimination
- First-mover advantage
-
What type of efficiency is improved when competition forces a firm to lower its production costs?
- X-inefficiency
- Productive efficiency
- Dynamic efficiency
- Allocative efficiency
-
Which economic outcome occurs when competition forces firms to align production with consumer preferences?
- Allocative efficiency
- Productive efficiency
- Market failure
- Economies of scale
-
Intense competition that severely squeezes firm profits is most likely to reduce which long-run outcome?
- Allocative efficiency
- Consumer surplus
- Dynamic efficiency
- Productive efficiency
-
A firm improving product quality rather than lowering prices to gain market share is an example of what?
- Price discrimination
- Non-price competition
- Collusive behaviour
- Predatory pricing
-
Which process describes new innovations continually replacing outdated firms and products over time?
- Static efficiency
- Market concentration
- Price discrimination
- Creative destruction
-
What usually happens to incumbent firm profit margins when new rivals enter a market?
- They stay fixed
- They fall
- They double
- They rise rapidly
-
Which type of analysis evaluates market performance at a single fixed point in time?
- Static analysis
- Macroeconomic analysis
- Econometric modelling
- Dynamic analysis
-
What is the primary long-run threat to a firm's monopoly power in a dynamic market?
- Economies of scale
- Innovative entry
- Price caps
- Fixed costs
-
A firm investing profits into research and development to cut future costs is achieving what?
- Dynamic efficiency
- X-inefficiency
- Allocative efficiency
- Pareto efficiency
-
What is the primary economic objective of government policies that promote market competition?
- Creating local monopolies
- Maximising consumer welfare
- Maximising firm profits
- Increasing entry barriers
-
Lowering entry barriers in a profitable market has what long-run effect on supernormal profits?
- They expand indefinitely
- They are eroded
- They remain unchanged
- They become negative
-
Competitive market processes emphasise that rivalry between firms occurs primarily across what dimension?
- Government policy
- Time
- Fixed snapshots
- National borders
-
In intense price competition with identical products, price is pushed down towards which level?
- Average revenue
- Total cost
- Maximum willingness
- Marginal cost
-
Competition encourages firms to improve service quality rather than compete on price alone. Which concept describes this?
- Price discrimination
- Collusive oligopoly
- Predatory pricing
- Non-price competition
-
Offering extended warranties and improved customer service is an example of what competitive strategy?
- Limit pricing
- Price discrimination
- Predatory pricing
- Non-price competition
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