social 12 (econ)- chapter 6

Question 1

an ideal market structure in which customers and producers each compete directly and fully under the laws of supply and demand.

Answer 1

perfect competition

Question 2

also called consumers

Answer 2

buyers

Question 3

also called producers

Answer 3

sellers

Question 4

one seller controls all production of a good or service

Answer 4

monopoly

Question 5

sellers offer different products rather than identical

Answer 5

monopolistic competition

Question 6

point out differences

Answer 6

differentiation

Question 7

compete on a basis other than price

Answer 7

nonprice competition

Question 8

a market structure in which a few large sellers control most of the production of a good or service

Answer 8

oligopoly

Question 9

being very responsive to-or dependent on- the pricing actions o their competitors.

Answer 9

interdependent pricing

Question 10

one of the largest sellers in the market takes the lead by setting a price for its product

Answer 10

price leadership

Question 11

sellers aggressively undercut eachother’s prices in an attempt to gain market share.

Answer 11

price war

Question 12

sellers secretively agree to set production levels or prices for their products

Answer 12

collusion

Question 13

companies openly organize a system of price setting an market sharing.

Answer 13

cartel

Question 14

features a single large seller that produces a good or service most efficiently

Answer 14

natural monopolies

Question 15

a condition in which, because of the level of resources needed, the cost of producing each unit of a product declines as the total number of units produced increases

Answer 15

economies of sale

Question 16

a market where geographic area is so limited that a single seller can control an item’s manufacture, sale, distribution, or price

Answer 16

geographic monopolies

Question 17

a market that is dominated by a single producer because of new technology it has developed

Answer 17

technological monopolies

Question 18

gives a business or individual the exclusive right to produce, use, rent, or sell an invention or discovery

Answer 18

patent

Question 19

gives authors, musicians, and artists exclusive rights to publish, duplicate, perform, display, and sell their creative works

Answer 19

copyright

Question 20

any market in which a government is the sole seller of a product

Answer 20

government monopoly

Question 21

huge monopolies that dominated the marketplace

Answer 21

trusts

Question 22

economic systems prosper when the government does not interfere with the market in any way.

Answer 22

laissez-faire

Question 23

designed to monitor and regulate big businesses, prevent monopolies from forming, and dismantle existing monopolies

Answer 23

antitrust legislation

Question 24

created the interstate commerce commission (ICC) to oversee the railroad rates; currently regulates railroads, motor vehicles, and other freight carriers

Answer 24

interstate commerce act

Question 25

prohibits any agreements, contracts, or conspiracies that would restrain interstate trade or cause monopolies to form

Answer 25

sherman antitrust act

Question 26

clarified and strengthened the Sherman antitrust act by prohibiting price discrimination, local price cutting, mergers that reduce competition, and exclusive sales contracts

Answer 26

clayton antitrust act

Question 27

the practice of offering different prices to different customers under the same circumstances

Answer 27

price discrimination

Question 28

created the federal trade commission (FTC) to investigate charges of unfair method of competition and commerce

Answer 28

federal trade and commission act

Question 29

protects small retail businesses by prohibiting wholesalers form charging small retailers higher prices than they charged large retailers and by prohibiting large retailers from setting artificially low prices

Answer 29

robinson-patman act

Question 30

list the conditions that exist when you have perfect competition

Answer 30

1. many buyers and sellers act independently
2. sellers offer identical parts
3. buyers are well informed about products
4. sellers can enter or exit the market easily

Question 31

list the three conditions that exist when an oligopoly is present

Answer 31

1. there are only a few large sellers
2. sellers offer identical or similar products
3. other sellers cannot enter the market easily

Question 32

why can’t sellers enter the market easily?

Answer 32

1. start up cost
2. gov regulations/laws
3. consumer loyalty

Question 33

list the three conditions that exist when a monopoly is present

Answer 33

1. there is a single seller
2. no close substitute goods are available
3. other sellers cannot enter the market easily

Question 34

list the three forces that limits the seller’s control over prices

Answer 34

1. consumer demand
2. potential competition
3. government regulation