Chapter 9 - Terms

Question 1

Arrangements people have developed for trading with one another

Answer 1

Market

Question 2

A family of common concerns, a group of businesses that sells a similar product, sells to a certain group of customers, or produces its products in a similar way

Answer 2

Industry

Question 3

Products that are different from one firm to another.

Answer 3

Differentiated products

Question 4

Products that are exactly alike from firm to firm.

Answer 4

Undifferentiated products

Question 5

A condition that prevents a new firm from entering an industry and competing on an equal basis with established firms

Answer 5

Barrier to entry

Question 6

The situation in which new firms are prevented from entering an industry because other firms already own all a vital natural resource necessary for the business

Answer 6

Natural barriers to entry

Question 7

The prevention of a new firm from entering an industry because of governmental regulations

Answer 7

Artificial barriers to entry

Question 8

The condition of a market when there is a very large number of sellers who are selling an identical product, each seller and buyer is perfectly aware of all information about the market, no seller can affect the price, and sellers find it relatively easy to enter and to exit the market.

Answer 8

Perfect competition

Question 9

The condition of a market in which there are many sellers of slightly differentiated goods, sellers, and buyers are reasonably aware of conditions that may affect the market, each seller has some control over his good’s price, and sellers find it relatively easy to enter and exit the market.

Answer 9

Imperfect competition

Question 10

A market in which only a handful of firms are selling either highly differentiated or undifferentiated products, sellers and buyers are not fully aware of all market information, each seller has a great deal of control over the price, and sellers find it relatively difficult to enter and exit the industry.

Answer 10

Oligopoly

Question 11

The selling of the same goods or services by a business firm to different buyers at different prices.

Answer 11

Synergy

Question 12

An oligopoly in which the top four firms account for at least 75 percent of the market sales.

Answer 12

Tight oligopoly

Question 13

An oligopoly in which the top four firms account for 50–75 percent of the industry’s total sales.

Answer 13

Loose oligopoly

Question 14

An oligopoly composed of two business firms.

Answer 14

Duopoly

Question 15

Agreement among a small number of producers to reduce their output and increase prices.

Answer 15

Collusion

Question 16

A group of producers who cooperate to control the price of their goods.

Answer 16

Cartel

Question 17

A form of market organization in which there is only one supplier in the industry selling an undifferentiated product.

Answer 17

Monopoly

Question 18

Monopoly that exists because one firm owns or controls 100 percent of some resource vital to the industry

Answer 18

Natural monopoly

Question 19

A monopoly in which the government allows one firm an exclusive right to provide a good or service.

Answer 19

Legal monopoly

Question 20

The head of the largest company in the industry would persuade the other firms to put their stock into a trust account

Answer 20

Trust

Question 21

A situation that reduces competition in an industry by placing one or more directors on the boards of competing firms.

Answer 21

Interlocking directorates

Question 22

Contracts forced upon smaller companies by a supplier to give exclusive rights to the supplier and thus reduce competition.

Answer 22

Tying contracts

Question 23

A situation in which business firms buy out other firms in their industry to eliminate or reduce competition

Answer 23

Anticompetitive takeovers

Question 24

The selling of the same goods or services by a business firm to different buyers at different prices.

Answer 24

Price discrimination