Market Structures Test

Question 1

Define Barrier to Entry

Answer 1

• obstacles that limit the ability of new companies to enter the market
• allows existing firms to earn profits in the long run

Question 2

Define Cartel

Answer 2

a pure monopoly and is very rare

Question 3

Define Deregulation

Answer 3

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

Question 4

Define Market Structure

Answer 4

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

Question 5

Define Monopolistic Competition

Answer 5

• many sellers with similar goods and services
• aka polyopolies
• most markets are this

Question 6

Define Monopoly

Answer 6

• One seller
• Restricted and regulated market
• Control of prices

Question 7

Define Oligopoly

Answer 7

• Few sellers/similar product
• Large firms
• Consumer choices are limited

Question 8

Define Predatory Pricing

Answer 8

the pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market.

Question 9

Define Price Fixing

Answer 9

conspiring among or between businesses to set the price of competing products

Question 10

Define Product Differentiation

Answer 10

the attempt to distinguish a product from similar products

Question 11

Define Public Disclosure

Answer 11

a policy requiring businesses to reveal product information to buyers

Question 12

Define Regulation

Answer 12

• Controlling behavior through rules and laws

- Promotes competition by prohibiting unfair business practicing

Question 13

Define Standardized Product

Answer 13

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

Question 14

What are the characteristics of imperfect competition?

Answer 14

• occurs in markets with few sellers or products that are not standardized
• Producers are hindered by barriers to entry in market structure

Question 15

What are the characteristics of perfect competition?

Answer 15

• ideal model of a market economy
• never can be perfect
• Most competitive market structure
• Tons of buyers and sellers
• Standardized products
• freedom to enter and exit
• Independent buyers and sellers
• Well informed buyers and sellers

Question 16

How are the monopolists able to control prices?

Answer 16

They can raise prices as they please because they have no competition

Question 17

What are examples of standardized products?

Answer 17

paper towels, eggs, milk, anything that is the same no matter where you get it

Question 18

Define Natural Monopoly and provide an example

Answer 18

a type of monopoly that operates most efficiently with only one producer; water companies

Question 19

Define Government Monopoly and provide an example

Answer 19

a market in which the government is the only legally permitted producer or service provider; post office

Question 20

Define Technological Monopoly and provide an example

Answer 20

special rights given to those who invent a new product to create some type of work; idk examples

Question 21

Define geographic Monopoly and provide an example

Answer 21

A condition that exists in a local area or region wherein one company is the sole provider of a good or service; general stores in small towns