Quiz 1 pt 2

Question 1

monopoly

Answer 1

a pure monopoly can only exist when ONE provider gives specific service or a product to numerous customers. (control of the entire market.)

Question 2

oligopoly

Answer 2

a type of market structure where a SMALL NUMBER of firms control the market.

Question 3

perfect competition

Answer 3

market structure where MANY firms offer a homogeneous/ similar products.
EX: Agricultural markets

Question 4

monopolistic competition

Answer 4

when MANY firms offer competing products or services that are SIMILIAR, but NOT perfect substitutes.

Question 5

define market failure

Answer 5

refers to the inadequate allocation of resources that occurs when individuals act in rational self-interest that produces a sub-optimal outcome.

Question 6

4 types of market failure

Answer 6

externalities
information failure
market control
Public goods

Question 7

externalities

Answer 7

occurs when the consumption of a good or service benefits or harms a third party.

+a positive gain on both social and private levels; a benefit to society (education, vaccines, drugs as medication, etc.)

• arise when one party makes another party worse off, yet does not bear the costs (where society is worse off due to the consumption of a good or service)

Question 8

information failure

Answer 8

where there is insufficient information available to certain participants in the market. (rational decision is unable to be made)

Question 9

market control

Answer 9

when one party has too much control over a market, creating imbalanced price, info, supply & lead to market failure.

monopoly or oligopoly: sellers hv advantage
monopsony or oligopsony: buyers hv adv.

Question 10

Public goods

Answer 10

They defy or go against the tenets of supply & demand that drive the free markets. Public goods are non-rivalrous and non-excludable.

non-rivalrous- One persons’ consumption of the good does not reduce the amount available for others. (WIFI, park)

non-excludable- difficult or impossible to prevent someone from enjoying the benefits of the good or service, even if they don’t contribute to its production. (police, firefighters, etc.)