chapter 7 study

What is an oligopoly?

A market structure in which a few large firms dominate the market

Which of the following is an example of resource mobility?

An engineering taking a job at a different.

Which would and economist say best describes a "trust"?

An illegal combination

Which of the following is NOT an example of oligopoly?

Automobile repair

__________ is an illegal agreement among producers to fix prices, limit output, or divide markets.

Collusion

How does a perfect market influence output?

Each firm adjusts its output so that its cost, included profit, are covered.

Which of the following is a benefit for monopolies?

Economy of scale production

Why is adequate information needed by the buyers and sellers in a market?

Information is needed to make a economic decisions.

What level of government is most closely associated with zoning?

Local

What is the relationship between start-up costs and a competitive market?

Market leaders with high start-up costs are less likely to be perfectly competitive.

Which statement is most accurate?

Markets can sometimes fail.

___________ is a market structure having all conditions of pure competition except for identical products.

Monopolistic competition

__________ is based on a product's appearance, quality, or design.

Nonprice competition

The government does not try to eliminate all monopolies.Why?

Not all monopolies are bad.

__________ is a market structure in which a few large seller's dominate and have the ability to affect prices in the industry.

Oligopoly

________ is a theoretical market structure that requires three conditions: very large numbers, identical products, and freedom of entry and exit.

Pure competition

What happens when some of the costs or benefits associated with production and consumption fall on someone other than the producers or consumers of a product?

There are unintended effects or spillovers.

Why will a monopolist charge less than the highest price possible?

To obtain the highest possible total revenue

A calculation that compares the cost of an action to its benefits is called

a cost-benefit analysis

What do externalities indicate?

a market failure

Pure monopoly means:

a single firm producing a product for which there are no close substitutes.

Which of the following do economists use to classify markets/

all of the answers Answers: A. size of firms B. number of firms C. type of product CorrectD. all of the answers

For price discrimination to work a firm must have

all of the answers.

One role of the federal government's Justice Department is to

break up monopolies.

A plant in the town of Klein closes, leaving hundreds of people unemployed. There are jobs available at a similar plant in another state, nut many of the unemployed workers are unwilling to move or cannot afford the move. An economists might use this example to

define resource mobility.

Patents are a form of monopoly that society allows because they

encourage firms to research and develop new products that benefit society as a whole.

In monopolistic competition, profits well in excess of cost is unlikely because

established rivals and new firms would lure customers away with slightly different and/or cheaper products.

A cartel is able to survive only if

every member keeps to the agreed output levels.

An unintended side effects that either benefit or harm a third party not involved in the activity that caused it is called a(n)

externality.

A mortgage is a process in which a lender reclaims a property due to a lack of payment by the borrower.

false

Because private business is involved in certain aspects of our economy, it is a modified version of free enterprise.

false

Price discrimination is the practice of setting prices to maximize profit.

false

Before government approves a merger, companies must prove that the merger would

lower costs and consumer prices or lead to a better product.

Compared to a market with perfect competition, a monopoly has

lower prices and more goods.

In many industries, deregulation has resulted in

lower prices for consumers.

By promoting transparency, the government can improve

market efficiency.

A condition that has none of the requirements for a competitive market such as adequate competition, knowledge of prices and opportunities, mobility of resources, and competitive profits is called a(n)

market failure.

Prices reasonably reflect production costs when

markets are competitive.

Which market structure is defined by a single producer?

monopoly

A new firm finds it almost impossible to enter an industry dominated by

monopoly.

Harm suffered by a third party because of the actions of others are called

negative spillovers.

Offering products of different tastes and shapes is an example of

nonprice competition.

Which of the following can cause market failure?

not enough information

A natural monopoly is a market that runs most efficiently when it has

one large firm providing all output

A market that is a monopoly has

one seller and many buyers

the government claimed that, to illegally extend its control over the market, Microsoft had used

predatory pricing and required costumers to buy other Microsoft products.

If a shoe company pays a professional athlete to wear shoes its makes, it is an example of

product differentiation. all of the answers. nonprice competition. imperfect competition

What condition differentiates a market of pure competition from one of monopolistic competition?

products

Economic products that are paid for and consumed collectively, such as highways, national defense, police and fire protection are called

public goods.

In which of the following industry structures is the entry of new firms the most difficult?

pure monopoly

An example of a public disclosure law is

requiring content labels on food products.

The controller of a monopoly sets the price of goods by charging

the price at which profit is maximized.

Milk is considered to be a commodity because it is which of the following?

the same product regardless of who sells it.

The market structure called perfect competition is best described as

theoretical.

Innovations like cellular phones can affect government's antitrust policies because

they can mean the need for regulations no longer exists.

In the United States, the federal government enforces antitrust laws and regulations to try to maintain effective level of competition.

true

Laws and regulations have been adopted in the United States to promote competition among firms.

true