Chapter 9 Section Reviews Flashcards
From an economist’s point of view, what is a market?
The arrangements people have developed for trading with one another.
What is an industry?
A group of businesses that sell a similar product, sell to a certain group of customers, or produce their product in a similar way.
List the four different characteristics of market organization.
- The number of firms in the industry
- The differences in the products sold
- The control of price
- The ease of entering and exiting the market
What type of business is one of the best examples of perfect competition?
Farming a particular crop, such as corn, soybeans, or wheat.
What is the most prevalent form of competition in America today?
Imperfect Competition
What is the most important characteristic of an oligopoly, and what does this term mean?
Mutual interdependence describes the situation in which the production decisions of one firm affect the profits of the others.
Why is it extremely difficult for a monopolistic firm to exit the industry?
The firm is the sole provider of a product or service.
List the five congressional acts that were passed between 1890 and 1950 to preserve competition. Include the date of each.
- The Sherman Antitrust Act of 1890
- The Clayton Act of 1914
- The Federal Trade Commission Act of 1914
- The Robinson-Patman Act of 1936
- The Celler-Kefauver Act of 1950
What is the difference between a monopoly and a trust?
A monopoly is one business, whereas a trust is multiple businesses cooperating and placing themselves under control of one manager to function as one business.
What is the most well-known and successful cartel, and what does it control?
OPEC; Oil
Why is collusion illegal in the United States?
It reduces competition, thereby raising prices and limiting the quantity of products available.
What governmental agency was created to enforce the Clayton Act, and what additional responsibility was that agency later given?
The Federal Trade Commission (FTC); consumer protection
