Economics Chapter 8
a product market served by only one firm is
a monopoly
a market in which high startup costs make it prohibitively expensive for more than one firm to operate is
a natural monopoly
the demand curve for monopoly is
above the marginal revenue curve
what is collusion
an agreement among competitors to work together
the body of law that has evolved to prevent firms from unfairly acquiring or using market power is called
antitrust policies
the marginal revenue curve for a monopolist is
below the demand curve
the goal in setting price controls is to
bring about the efficient quantity of a good
why do most governments bar the formation of cartels
cartels can unfairly influence markets
if every customer had to pay his or her reservation price for a good, the customer would be indifferent between buying it or not. Their net gain from choosing to buy, which economists call ____ would be ____
consumer surplus, zero
perfect price discrimination mostly benefits
firms
in monopolistic competition
firms break even in the long run
middle aged adults have a higher reservation price for movie tickets than senior citizens, so
movie theaters price discriminate by charging middle aged adults more than senior citizens
the market structure characterized by firms that have a collective incentive to collude, but an individual incentive to produce more than the quantity that is in the collective interest is
oligopoly
when a monopoly replaces a perfectly competitive market, consumers typically
pay higher prices
The most competitive market structure is
perfect competition
in which of the following market structures are firms price takers
perfect competition
if a monopolist can employ ______, charging each customer his or her own reservation price, then the inefficiency of monopoly is eliminated
perfect price discrimination
the practice of charging different customers different prices for the same good is called
price discrimination
a monopoly is likely to ____ units of output and ____ price that a perfectly competitive firm
produce fewer, charge a higher
a perfectly competitive firm is likely to ____ units of output and ____ price than a monopoly firm
produce more, charge a lower
the ____ for a good includes all of those products that consumers consider to be close substitutes
product market
by restricting output, _____ drive up the price and, therefore, the profit for each member of the cartel
quotas
an example of monopolistic competition is the ____ market
restaurant
which of the following is a predatory act
temporarily cutting prices to drive competitors out of business
a group of firms that collude to monopolize a market is called
a cartel
one effect of free entry in a market is
increased product innovation
which factor mostly determines whether the U.S. federal government will seek to block a proposed merger
likely price increases
In which of the following market structures do firms invest in brand loyalty
monopolistic competition
a market in which many firms sell similar but not identical products is called
monopolistic competition
due to the existence of a large number of similar, but not identical, substitutes in most communities, the market for barber shops is best considered
monopolistic competition
freedom of entry into the marker characterizes which of the following
monopolistic competition and perfect competition
in which of the following market structures are firms price makers
monopolistic competition and perfect competition
the least competitive market structure is
monopoly
in which of the following market structures do firms have competitors
monopoly, monopolistic competition and perfect competition
markets in which inefficiency arises include
monopoly, oligopoly and monopolistic competition
why were antitrust acts most likely not passed until the late 1800s and 1900s
most earlier monopolies did not engage in high levels of unfair business practices
Why does standard oil no longer monopolize the U.S oil market
the supreme court divided up the company
