Unit 2 pts. 2/3 Quiz

Question 1

Give a few key details on the thoughts and ideas of Adam Smith.

Answer 1

Scottish Philosopher, 1723-1790, Wrote “Wealth of Nations”, in 1776 and created the idea of the “Invisible Hand”- The idea that people pursuing their own self-interest is good for society.

Question 2

Give a few key details on the thoughts and ideas of Karl Marx

Answer 2

German philosopher works: “communist manifest”, communism- Argues that the working class will overthrow the owners and get rid of private property.

Question 3

Compare and contrast John Maynard Keynes VS. Milton Friedman

Answer 3

John was a British economist and argued the government has a role in solving market failures/depressions. argues for government spending in periods of recession. Milton was an American economist who argued against government intervention in the economy and argued that government spending increases inflation

Question 4

What questions are asked when considering “Market structure”?

Answer 4

1. How much control of price?
2. How many firms are competing in the market?
3. Size of each firm?
4. Characteristics of products?
5. Easy entry into the market?

Question 5

Explain “Perfect competition”. (Also touch upon “imperfect competition”)

Answer 5

Doesn’t exist. Theoretical. (ONLY NEED TO REMEMBER 2 OF THESE) 1. Large number of buyers and sellers. 2. buyers and sellers deal in identical products. 3. buyers and sellers act independently. 4. buyers and sellers are well-informed
Ex: Farming products

Question 6

Explain monopolistic competition (Examples)

Answer 6

Meets all criteria for perfect competition except for identical products. product differentiation: Real perceived differences in products.

Question 7

Explain oligopolies

Answer 7

“OLI”= A few
def= a market with a few sellers
-Interdependence
-Collusion: an agreement to raise prices

Question 8

Give examples of oligopolies

Answer 8

1. Telecommunications
2. AutoMakers
3. Oil & Gas
4. Credit Card Companies

Question 9

What is a monopoly?

Answer 9

Market with ONE seller

Question 10

What US law is associated with the beginnings of regulating monopolies?

Answer 10

Sherman Antitrust Act, 1890

Question 11

Name a few examples of “Antitrust suits” against monopolistic tactics

Answer 11

1. Standard Oil company
2. AT&T
3. Microsoft

Question 12

What are three examples of legal monopolies?

Answer 12

1. Natural Monopoly (Utilities)
2. Geographic Monopoly (Region)
3. Technological (Pattens)