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PAP Hill Economics And Choice > Market Structures > Flashcards

Market Structures Flashcards

1
Q

Barrier to Entry

A
  • Obstacles that limit the ability of new companies to enter the market
  • allow existing firms to earn economic profits in the long run
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2
Q

Cartel

A

A formal organization of sellers or producers that agree to act together to set prices and limit output

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3
Q

Deregulation

A
  • Reduction of government oversight and control of business
  • Results in lower prices because there is more competition
  • May lead to fewer protections for consumers
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4
Q

Market Structure

A

Economic model that allows economists to examine competition among businesses in the same industry

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5
Q

Monopolistic Competition

A
  • Aka Polyopolies
  • Many sellers with similar goods/services
  • most markets fall into this category
  • consumers benefit from competition
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6
Q

Monopoly

A
  • Producer has no competition
  • occurs when there is one seller of a product that has no close substitute
  • can describe the market structure an/or the actual business
  • 4 types (natural, government, technological, and geographic)
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7
Q

Oligopoly

A
  • Few sellers/similar product
  • large firms (typically manufacturing)
  • consumer choices are limited
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8
Q

Predatory Pricing

A

setting prices below cost for a time to drive smaller competiors out of the market
(like kum and go)

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9
Q

Price Fixing

A

the maintaining of prices at a certain level by agreement between competing sellers. ( occurs when businesses work together to set the prices of something products)

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10
Q

Product Differentiation

A

is the attempt to distinguish a product from similar products

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11
Q

Public Disclosure

A

Which requires businesses to reveal product information to consumers (usually not a good thing)

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12
Q

Regulation

A
  • Controlling behavior through rules/laws
  • Promotes competition by prohibiting unfair business prices (price fixing, market allocation, and predatory pricing)
  • Protects consumers
    - Public disclosures
    - protection agencies
    - food and drug administration
    - environmental protection agency
    - consumer product safety commision
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13
Q

Standardized Product

A

A product that consumers consider identical in all essential features to other products in the same market

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14
Q

What are the characteristics of imperfect competition?

A

-occurs in the markets that have few sellers or products that are not standardized
-producers are hindered by barriers to entry in the market structure
(could not find characteristics but this is the definition in notebook)

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15
Q

What are the characteristics of perfect competition?

A
  • numerous buyers and sellers
  • standerdized products
  • freedom to enter and exit the market
  • independent buyers and sellers
  • well informed buyers and sellers
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16
Q

How are monopolist able to control prices?

A

only one seller and there is no competition

17
Q

What are barriers to entry?

A
  • Something that hinders a business from entering a market

- like regulations such as the inability to create a moving business without a license

18
Q

What are examples of standardized products?

A

Like pencils, they all have lead in them and they are used to write with

19
Q

Define the four types of monopolies? Provide an example of each.

A
  • Natural (a water company)
  • Government (the postal service)
  • Technological (Polaroid)
  • Geographic (professional sports)
20
Q

What are some characteristics and examples of monopolistic competition?

A 
Characteristics
-many sellers and b uyers
-similar but different products
-limited control orf prices
-feedom to enter/exit market
Examples
-fast food restraunts (burger king, mcdonalds, and sonic)
-clothing stores (cato, maurices)
21
Q

What are the characteristics of monopolies?

A
  • one seller
  • restricted and regualted market
  • control of prices
22
Q

What is an example of a pure monopoly that is rare?

A

cartel

23
Q

What are some examples of barrier to entry?

A
  • Legal: patents, copyrights, government regulation
  • control of resources
  • economies to scale
  • market advantages: brand loyalty, marketing access
24
Q

What are some characteristics of oligopoly?

A
  • few sellers and many buyers
  • standardized of differentiated products
  • control of price
  • little freedom to enter and exit the market
25
Q

What are some examples of oligopoly?

A

Breakfast cereal industry
-general mills, post, and Kelloggs
Soft drink companies
-Pepsi, and coke

26
Q

Perfect competition?

A
  • the ideal model of a market economy
  • never can be truly perfect
  • most competitive market structure
  • economists assess how competitive a market structure is by determining where it falls short of perfect competition
27
Q

what is an example of price fixing?

A

For instance, when radioshack and bestbuy get together and decide on what amount they want to sell their products for at each price.

28
Q

what is an example of public disclosure?

A

Like nutrition labels on food

29
Q

what is an example of product differentation?

A

Whenever apple came out with the thumb print on the iphone 5s, no other company had it yet

30
Q

what is an example of perfect competition?

A

There are no real examples of perfect competition because it does not exist, but the closest example of one is a farmers market

31
Q

what is an example of imperfect competition?

A

All competition today is considered imperfect competition; corn; beef

32
Q

competition

A

The effort of two or more people acting independently to get business by offering the best deal
-Bare minerals makeup vs. Estee Lauder makeup

33
Q

Price discrimination

A
  • divide consumers into two or more groups and charge different prices to each group of consumers
  • Polyopolies can attract more consumbers through price discrimination
  • Examples (coupons)
34
Q

Natural monopoly

A

A type of monopoly that operates most efficiently with only one producer
Ex: water companies

35
Q

Government monopoly

A

A market in which the government is the only legally permitted producer or service provider
Ex: postal service

36
Q

Technological monopoly

A

Special rights given to those who invent a new product to create some type of work
Ex: Polaroids

37
Q

Geographic monopoly

A

A condition that exists in a local area or region where in one company is the sole provider of a good or a service
Ex: professional sports

PAP Hill Economics And Choice (8 decks)

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