Markets Flashcards
What is a market?
demand for a SINGLE PRODUCT at any given time
What does the market continuum for capitalism look like? (in order according to size)
pure competition on left end monopolistic competition oliogoply near monopoly pure monopoly on right end
Why are many sellers of a similar product in monopolistic competition?
because it gives consumers choices, prices are reasonable (because of the competition and quality is decent (because sellers have to keep up with each other)
Why are majority of the markets monopolistic?
because the people control the money, the people want options and good prices and dollar voting
What is an oliogopoly?
few sellers of a product for which there is no close substitute (oil and airlines)
- not subject to anti trust laws
- collusion: where people form together to form a big monopoly
- 4 sellers have buyers contained, prices are high and quality is alright
- not a lot of advertising because they still get buyers
Why are oliogoplies dangerous?
because there is no incentive for quality and high prices
What is a near monopoly? and the 4 types
1 or 2 sellers of a product for which there is no close substitute. HEAVILY REGULATED BY GOVERNMENT
1) Natural
2) Technological
3) Government
4) Geographic
What does the communist/socialist market continuum look like? (in order according to size)
near monopoly
oliogopoly
monopolistic competition
What are the 6 things that are needed for pure competition to exist?
1) MANY buyers and sellers-the entry and exit of any buyer/seller wont affect the market price of the product (GOOD)
2) product for sale will be identical- there will be no incentive to improve the quality of the product (BAD)
3) buyers/sellers act independently in the market- if buyers don’t get what they want, they will boycott…there wou and lose our voice in the market (BAD)
4) collusion-sellers get together and control market, illegal in the US (GOOD)
5) completely free market- government plays no role whatsoever in the economy…there would be no FDA, food/safety regulations (BAD)
6) buyers and sellers would have perfect knowledge of all products and can not be taken advantage of
What is needed for a pure monopoly to exist?
FIRST-pure monopolies are bad, b/c there is only one seller of a product
1) no pure monopolies in the US, because of so many government regulations and anti trust laws
2) globally there aren’t pure monopolies because there is a decent substitute for most things because of technology
What is a natural near monopoly?
occurs when government allows a private business to be a near monopoly b/c government feels that its in our best interest to do so. Government will protect them from competition
What is a Franchise?
permission given to the business to be a near monopoly, but there is extensive government regulation by the Public Service Commission. It will last as long as the government believes that we are best served by this natural near monopoly
What is a Technological Near Monopoly?
when the federal government gives an individual/company permission to be a near monopoly as a reward for their entrepenuership…pushes us up on the production possibilites curve and creates new jobs. A patent protects a technological near monopoly
What is a government near monopoly?
when the government is a near monopoly, the government is only allowed to do something
What is a geographic near monopoly?
because of its location, it is not heavily regulated by law, at anytime, anyone could come in and compete with you
