Chapter 6 (market structures)

Question 1

Under perfect competition, buyers and sellers act

Answer 1

independently

Question 2

How does product differentiation bring about a rise in prices?

Answer 2

by increasing demand

Question 3

Under perfect competition, buyers must be (blank) about products.

Answer 3

well informed

Question 4

An oligopoly could be ended by a

Answer 4

• drop in business start-up costs
• change in government regulations
• change in consumer loyalties

Question 5

What is the key difference between perfect competition and monopolistic competition?

Answer 5

• buyers are not well informed
• products are different rather than identical
• government regulations are stricter

Question 6

If competition is inconvenient and impractical, what kind of monopoly tends to develop?

Answer 6

natural monopoly

Question 7

(Blank) often run monopolies, usually of basic necessities like public utilities.

Answer 7

Governments

Question 8

What sets prices in a perfectly competitive market?

Answer 8

supply and demand

Question 9

Under monopolistic competition, sellers differentiate their products through(blank).

Answer 9

non-price competition

Question 10

In a (blank) market, nothing prevents competition among both buyers and sellers.

Answer 10

perfectly competitive

Question 11

Antitrust legislation was enacted in the late 1800s’ to

Answer 11

• monitor and regulate big business
• prevent monopolies from forming
• dismantle existing monopolies

Question 12

Sellers in an oligopoly maintain a degree of control over their prices through (blank) –being very responsive to the pricing actions of their competitors.

Answer 12

interdependent pricing

Question 13

The situation in which sellers undercut each other’s prices in an attempt to gain market share is called

Answer 13

price war

Question 14

Sellers in an oligopoly sometimes form a (blank), in which companies openly organize a system of price-setting and market sharing.

Answer 14

cartel

Question 15

Gives authors, musicians, and artists exclusive rights to publish, duplicate, perform, display, and sell their creative works

Answer 15

copyright

Question 16

This act set the tone for antitrust legislation

Answer 16

Sherman Antitrust Act

Question 17

Economic theory that states that economic systems prosper when the government does not interfere in the market

Answer 17

laissez-faire

Question 18

Producers use this to set their products apart

Answer 18

product differentiation

Question 19

An ideal market structure in which consumers and producers each compete directly and fully under the laws of supply and demand

Answer 19

perfect competition

Question 20

Gives a business or individual the exclusive right to produce, use, rent, or sell an invention or discovery

Answer 20

patent

Question 21

A market dominated by a few large sellers

Answer 21

oligopoly

Question 22

What kind of monopoly does the granting of patents encourage?

Answer 22

technological

Question 23

In a (blank) monopoly, a single large seller produces a good or service most efficiently.

Answer 23

natural

Question 24

A (blank) is a market structure in which a single seller controls the production of a good or service.

Answer 24

monopoly

Question 25

The effort by sellers to secretly set production levels or prices is called

Answer 25

collusion

Question 26

The main goal of product differentiation and non-price competition is to increase (blank).

Answer 26

profits