Chapter 7: Market Structures

Question 1

economic model of competition within a particular industry

Answer 1

market structure

Question 2

ideal model of a market economy

Answer 2

perfect competition

Question 3

what are the 5 characteristics of perfect competition?

Answer 3

1. many buyers and sellers
2. standardized products
3. freedom to enter and exit market
4. independent buyers and sellers
5. well-informed buyers

Question 4

seller that accepts market price set by supply and demand

Answer 4

price taker

Question 5

market structures that lack one or more of the conditions

Answer 5

imperfect competition

Question 6

market structure with one seller, no substitutes for product

Answer 6

monopoly

Question 7

organization of sellers that agree to set prices, limit output

Answer 7

cartel

Question 8

business without competitors, can set prices

Answer 8

price maker

Question 9

obstacle to entering market

- government regulations, size, resources, technology

Answer 9

barrier to entry

Question 10

what are the 3 characteristics of a monopoly?

Answer 10

1. only one seller
2. a restricted, regulated government
3. control of prices

Question 11

cost of production lowest with only one producer

Answer 11

natural monopoly

Question 12

government owns and runs or permits only one producer

Answer 12

government monopoly

Question 13

one firm owns invention, technology method

Answer 13

technological monopoly

Question 14

no other sellers within a region

Answer 14

geographic monopoly

Question 15

give an example of a natural monopoly.

Answer 15

water company

- public utilities that require complex systems

Question 16

average production cost falls as production grows

Answer 16

economies of scale

Question 17

give an example of a government monopoly.

Answer 17

post office

Question 18

legal registration of invention that gives invented sole rights, enables businesses to recover costs of development

Answer 18

patent

Question 19

give an example of a technological monopoly.

Answer 19

polaroid camera, substitute of digital camera

Question 20

give an example of a geographic monopoly.

Answer 20

professional sports teams

Question 21

many sellers offer similar products

Answer 21

monopolistic competition

Question 22

sellers try to distinguish there products from similar ones

Answer 22

product differentiation

Question 23

use factors other than price to attract customers

Answer 23

non-price competition

Question 24

expenses of entering new market

Answer 24

start-up costs

Question 25

percent of total sales in the market

Answer 25

market share

Question 26

market structure with only a few sellers offering similar products

Answer 26

oligopoly

Question 27

what are the 4 characteristics to an oligopoly?

Answer 27

1. few sellers, many buyers
2. standardized or differentiated products
3. more control of prices
4. little freedom to enter or exit market