chap 7

Question 1

market structure

Answer 1

is an economic model of competition among businesses in the same industry.

Question 2

perfect competition

Answer 2

is the ideal model of a market economy.

Question 3

standardized product

Answer 3

is one that consumers see as identical regardless of producer.

Question 4

price taker

Answer 4

is a business that accepts the market price determined by supply and demand.

Question 5

imperfect competition

Answer 5

occurs in markets that have few sellers or products that are not standardized.

Question 6

monopoly

Answer 6

occurs when there is only one seller of a product that has no close substitutes.

Question 7

cartel

Answer 7

is a group that acts together to set prices and limit output.

Question 8

price maker

Answer 8

is a firm that does not have to consider competitors when setting the prices of its products.

Question 9

barrier to entry

Answer 9

makes it hard for a new business to enter a market

Question 10

natural monopoly

Answer 10

occurs when the costs of production are lowest with only one producer.

Question 11

government monopoly

Answer 11

exists when the government either owns and runs the business or authorizes only one producer.

Question 12

technological monopoly

Answer 12

occurs when a firm controls a manufacturing method, invention, or type of technology.

Question 13

geographic monopoly

Answer 13

exists when there are no other producers within a certain region

Question 14

economies of scale

Answer 14

occur when the average cost of production falls as the producer grows larger.

Question 15

patent

Answer 15

gives an inventor the exclusive property rights to that invention or process for a certain number of years

Question 16

monopolistic competition

Answer 16

occurs when many sellers offer similar, but not standardized, products.

Question 17

product differentiation

Answer 17

is the effort to distinguish a product from similar products.

Question 18

non price competition

Answer 18

occurs when producers use factors other than low price to try to convince customers to buy their products

Question 19

focus group

Answer 19

is a moderated discussion with small groups of consumers.

Question 20

oligopoly

Answer 20

is a market structure in which only a few sellers offer a similar product.

Question 21

market share

Answer 21

is a company’s percent of total sales in a market.

Question 22

start-up costs

Answer 22

are the expenses that a new business faces when it enters a market.

Question 23

regulation

Answer 23

is a set of rules or laws designed to control business behavior

Question 24

antitrust legislation

Answer 24

defines monopolies and gives government the power to control them.

Question 25

trust

Answer 25

is a group of firms combined in order to reduce competition in an industry.

Question 26

merger

Answer 26

is the joining of two firms to form a single firm.

Question 27

price fixing

Answer 27

occurs when businesses agree to set prices for competing products.

Question 28

market allocation

Answer 28

occurs when competing businesses divide a market amongst themselves.

Question 29

predatory pricing

Answer 29

occurs when businesses set prices below cost for a time to drive competitors out of a market.

Question 30

cease and desist order

Answer 30

requires a firm to stop an unfair business practice.

Question 31

public disclosure

Answer 31

is a policy that requires businesses to reveal product information.

Question 32

deregulation

Answer 32

reduces or removes government control of business.