Chapter 6 (market structures) Flashcards
Under perfect competition, buyers and sellers act
independently
How does product differentiation bring about a rise in prices?
by increasing demand
Under perfect competition, buyers must be (blank) about products.
well informed
An oligopoly could be ended by a
- drop in business start-up costs
- change in government regulations
- change in consumer loyalties
What is the key difference between perfect competition and monopolistic competition?
- buyers are not well informed
- products are different rather than identical
- government regulations are stricter
If competition is inconvenient and impractical, what kind of monopoly tends to develop?
natural monopoly
(Blank) often run monopolies, usually of basic necessities like public utilities.
Governments
What sets prices in a perfectly competitive market?
supply and demand
Under monopolistic competition, sellers differentiate their products through(blank).
non-price competition
In a (blank) market, nothing prevents competition among both buyers and sellers.
perfectly competitive
Antitrust legislation was enacted in the late 1800s’ to
- monitor and regulate big business
- prevent monopolies from forming
- dismantle existing monopolies
Sellers in an oligopoly maintain a degree of control over their prices through (blank) –being very responsive to the pricing actions of their competitors.
interdependent pricing
The situation in which sellers undercut each other’s prices in an attempt to gain market share is called
price war
Sellers in an oligopoly sometimes form a (blank), in which companies openly organize a system of price-setting and market sharing.
cartel
Gives authors, musicians, and artists exclusive rights to publish, duplicate, perform, display, and sell their creative works
copyright
This act set the tone for antitrust legislation
Sherman Antitrust Act
Economic theory that states that economic systems prosper when the government does not interfere in the market
laissez-faire
Producers use this to set their products apart
product differentiation
An ideal market structure in which consumers and producers each compete directly and fully under the laws of supply and demand
perfect competition
Gives a business or individual the exclusive right to produce, use, rent, or sell an invention or discovery
patent
A market dominated by a few large sellers
oligopoly
What kind of monopoly does the granting of patents encourage?
technological
In a (blank) monopoly, a single large seller produces a good or service most efficiently.
natural
A (blank) is a market structure in which a single seller controls the production of a good or service.
monopoly
The effort by sellers to secretly set production levels or prices is called
collusion
The main goal of product differentiation and non-price competition is to increase (blank).
profits
