Chapter 9 Test Flashcards
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.
1) Number of firms in the industry
2) Differences in the products sold
3) Control of price
4) Ease of entering/exiting the market
What type of business is one of the best examples of perfect competition?
Farming a particular crop (corn, soybeans, wheat, etc)
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 and include the dates of each.
1) Sherman Antitrust Act- 1890
2) Clayton Act- 1914
3) Federal Trade Commission Act- 1914
4) Robinson-Patman Act- 1936
5) Celler-Kefauver Act- 1950
What is the difference between a monopoly and a trust?
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 Unites 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?
Federal Trade Commission- consumer protection
From an economist’s point of view, what is a market?
The arrangements people have developed for trading with one another
