1. Four-four-three

Question 1

4 factors of production

Answer 1

1|land (natural resources – ocean, coal, rivers, trees, sun, wind…)
2|labor (human resources)
3|capital (anything that has value – money, things, human capital) – can be increased by a bigger labor force, greater use of land and investments
4|enetrprise – all businesses

Question 2

4 types of markets

Answer 2

• present in every single economy
  1|perfect competition
  2|monopoly
  3|monopolistic competition
  4|oligopoly (non-collusive and collusive)

Question 3

1| perfect competition

Answer 3

• hypothetical
• no intervention or monopoly
• unlimited number of p&c
• prices and d&s in equilibrium
• equal and collaborative competitors
• consumers take any price

Question 4

2| monopoly

Answer 4

• company monopolist has more than 50% of the market share
• monopolers sell and produce similar products (small product range)
• monopolers are the price makers
• barriers to enter their market are high (financial and technological)
• government has to control

Question 5

how monopoly can be positive and negative for consumers?

Answer 5

– negative for consumers (P can be increased by a lot)
– positive for consumers (bigger companies can afford to keep P low)
– G can control monopoly easier than many little businesses and collect more taxes from them (money can be invested into land, labor, education)

Question 6

natural monopoly

Answer 6

a company can produce and sell products/services at a lower cost than their competitors can

Question 7

artificial monopoly

Answer 7

a company buys other companies

Question 8

monopolistic competition

Answer 8

• many companies with similar products competing to become a monopolist
• many p&c
• highly competitive market
• lower prices
• market barriers (capital) low

Question 9

oligopoly

Answer 9

• non-collusive and collusive (cartel)
• 2-5 companies that hold the market
• competing amongst themselves (n.c.)
• join together and have non-written agreements about prices (c.)
• (OPEC, narco cartel (illegal))

Question 10

3 types of economies

Answer 10

1|CPE (centrally planned economy)
2|FME (free market economy)
3|mixed

Question 11

CPE

Answer 11

the government decides on d&s and how much will be produced (North Korea)

Question 12

FME

Answer 12

government’s decision on D&S is low (USA, Hong Kong)

Question 13

mixed

Answer 13

the government decides only on important production (e.g. weapons) - more like FME than CPE