Transcript Chapter 8 Review: Market Structures

Chapter 8 Review
Economics
1
A(n) ___________ market
has many buyers and sellers that
all sell identical goods.
Perfectly competitive
2
 A type of economic competition where
Few sellers
Identical or slightly differentiated
products
Significant barriers to entry
 Oligopolistic market
3
A clothing store faces this
type of competition.
Monopolistic competitive
4
A seller that can sell its good only
at the equilibrium price would be
considered a(n) __________.
Price taker
5
Exists when a seller charges
different prices to different
buyers and the price differences
do not reflect cost differences.
Price discrimination
6
In which type of market do all
firms produce exactly the same
type of good?
Perfect competition
7
OPEC is an example of a
Cartel
8
 In which type of market do buyers and
sellers have all the relevant
information about prices, product
quality, and supply?
 Perfect competition
9
A soybean farmer faces this type of
competition.
Perfectly competitive
10
In a monopoly, sellers are
_________.
Price searchers.
11
Airlines operate in this type of
market.
Oligopolistic.
12
Firms in monopolistic competitive
markets are _______.
Price searchers
13
 A market structure with
 Many buyers & sellers
 Identical products
 Sellers & buyers have all relevant information
 Easy entry & exit
 Perfect competition
14
An agreement that specifies that
firms will act in a coordinated
way to reduce competition
among them.
Cartel agreement
15
 Legislation passed for the stated purpose
of controlling monopoly power and
preserving and promoting competition.
 Antitrust law
16
Firms in perfectly competitive
markets are __________.
Price takers
17
A type of economic competition
where
There is one seller
The product has no close
substitutes
The barriers to entry are high
Monopoly
18
 Which market structure relies heavily
on advertising to differentiate their
products?
 Monopolistic competition
19
 When a single producer has complete
control over one kind of good or
service, the market structure is called
_________.
 Monopolistic
20
 When it comes to determining price,
sellers in a perfectly competitive
market have __________.
 No control
21
Firms in oligopolistic markets are
__________.
Price searchers
22
 In a perfectly competitive market,
products must be ____________.
 Identical
23
Making secret agreements that
effectively reduce competition.
Colluding
24
 The market structure that consists of
one seller who sells a product that has
no close substitutes is called a(n) ____
market.
 Monopoly
25
 A(n) ________ is formed when firms
decide to act in a coordinated way to
reduce the competition among them
and raise their profits.
 Cartel agreement
26
 A type of competition where there are
 Many buyers and sellers
 Products are slightly differentiated
 No barriers to entry
 Monopolistic competition
27
A _______ exists when the
government grants a firm the
exclusive right to provide a
particular good or service and
excludes all others from doing so.
Public franchise
28
 Things such as patents or copyrights,
which make it difficult for a new
business to open in a particular market,
are considered __________.
 Barriers to entry
29
 Laws meant to control monopoly
power and to preserve and promote
competition are referred to as
_________ laws.
 Antitrust
30
A firm with such a low average
total cost that only it can survive in
the market.
Natural monopoly
31
 A right granted to a firm by
government that permits the firm to
provide a particular good or service and
excludes all others from doing so.
 Public franchise.
Chapter 8 Review
True/False Statements
1
Monopolists are always profitable.
False
2
The U.S. automobile industry
operates in a perfectly competitive
market.
False
3
 The vast majority of firms face perfect
competition.
 False
4
Cartel agreements are legal in
the U.S.
False
5
Senior citizens discounts are an
example of illegal price
discrimination.
False
6
Monopolists can charge whatever
price they want and still be
profitable.
False
7
It is difficult for monopolists to
know what price to charge.
True
8
It is easy for sellers in a perfectly
competitive market to raise their
prices whenever they feel like it.
False
9
Price takers can sell all their goods
at the equilibrium price.
True
10
Entry into and exit from an
oligopolistic market is easy.
False
11
When price rises in a perfectly
competitive market, new
producers will enter the market.
True
12
When a firm operates as a
monopoly, it means there are high
barriers of entry for competitors
to enter the market.
True
13
A characteristic of the farming
industry is the ability of producers
to slightly differentiate their
products.
False
14
Sellers who produce identical
products produce the quantity of
output at which marginal revenue
equals marginal cost.
True
15
 As the supply of goods in a market
increases, it causes the price to fall until
firms no longer see an incentive to
enter the market.
 True
16
 For a monopolistic competitor, a rise in
the price of its good will not cause all
its customers to leave it and select the
competitor's product.
 True
Final Question
Pure
Competition
Description
Price Taker
or Price
Searcher?
Non-price
competition?
Monopoly
Monopolistic
Competition
Oligopoly