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.
“Selling to a few.”

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

When the head of a large company persuades other firms to put their stock into one account

Answer 20

Trust