Lesson 32 pg. 90 - 92

Question 1

Define industries

Answer 1

industries - groups of firms that produce similar products or provide similar services

Question 2

What are the four main types of market models that economists normally recognize?

Answer 2

> perfect competition
monopolies
monopolistic competition
oligopolies

Question 3

Describe the perfect competition

Answer 3

> purest form of competition
sometimes called pure competition
following characteristics: large number of independent sellers, large number of independent buyers, all firms produce a standardized product, free access to market, and relevant market information available to all firms and buyers
no individual seller or buyer has enough influence to noticeably affect equilibrium price of goods traded there
each firm in market is known as price taker
price and quality are determined by many bargains among sellers and buyers
it turns out the highest quality of goods for price people are willing to pay

Question 4

Describe the price taker of the perfect combination

Answer 4

> Each firm in the market is known as a price taker because it has no real control over price it receives for its product–the firm takes whatever price it can get