CHAPTER 10

Question 1

three mechanisms of markets

Answer 1

ease of entry, number of firms, similarity of products

Question 2

Independence

Answer 2

experienced by oligopolies. The action of one firm will affect the other

Question 3

how to achieve long-run profit

Answer 3

create high barriers to entry, lowering costs, deterring potential competitors

Question 4

mechanisms to create high barriers to entry

Answer 4

introduce loyalty programs, develop unique cost advantages, mobilise the government to prevent entry, threat tactics

Question 5

efficiency trade-off

Answer 5

allocative efficiency and dynamic efficiency

Question 6

Define Collusion

Answer 6

done by firms within an oligopoly, agreeing to change a particular price or output level, acting as one big monopolist

Question 7

five forces needed to understand and manage to make and sustain economic profit

Answer 7

existing competitors, potential competitors, potential competition from other markets, bargaining power of suppliers, bargaining power of buyers