Week 11 Principles of Economics

For each of the markets listed below, determine whether the market can reasonably be described as monopolistically competitive

Satellite radio - not monopolistically competitive AM or FM radio - monopolistically competitive Common salt - not monopolistically competitive Clothing - monopolistically competitive Shampoo - monopolistically competitive

a number of entry barriers are present in oligopolistic markets, including

-control of the resources needed to produce output -significant cost of capital -patents -price strategies -economies of scale the may allow only a small number of firms to operate in a market

the characteristics of an oligopoly competitive market are:

-either standardized or differentiated products -operation in industries with extensive entry barriers -a few large producers -producers who behave strategically when making decisions related to the features, prices, and advertising of their products

oligopolistic competition

-few sellers -homogeneous or differentiated product -high barriers to entry Ex: -operating systems -computer systems -launch systems (rockets) -satellite television -crude oil

which of the following are the four characteristics of a perfectly competitive market?

-large numbers of buyers and sellers -standardized product -easy entry and exit

a market with many buyers and sellers, free entry and exit, and no externalities is called

a competitive market

monopolistically competitive markets:

combine characteristics of competitive markets and pure monopolies

a positive _____ is an unpaid benefit of an activity that is enjoyed by a third party

externality

federal trade commission act refers to

made "unfair methods of competition" and "unfair or deceptive acts or practices" illegal

a market structure characterized by a relatively large number of sellers producing a differentiated product. for which they have some control over the price they charge, in a market with relatively easy market entry and exist is known as ________ competition

monopolistic

in a _____ competitive market, consumers can usually find exactly what they are looking for based on their preferences and budgets

monopolistic

a manufacturer's profits are determined not only by its decisions but also by the decisions of the other firms in the industry. This is why we say that oligopolistic firms are:

mutually interdependent

a ______ externality is the uncompensated cost of an activity that is imposed on a third party

negative

producers operating in oligopolistic markets generate:

normal profits and even losses in the short run

monopolistic competition and a monopoly are:

not the same market structure

the behavior followed by ______ firms needs to be strategic, given that they face other competitors in their markets

oligopolistic

For each of the markets listed below, determine whether the market can reasonably be described as oligopolistic

satellite television - oligopolistic hotels - not oligopolistic tomatoes - not oligopolistic crude oil - oligopolistic

monopolistic competition

-many sellers -differentiated product -no barriers to entry/exit Ex: -clothes -backpacks -restaurants -shampoo and conditioner -AM or FM radio

Perfect competition

-many sellers -homogeneous product -no barriers to entry/exit Ex: -

pure monopoly

-one seller -no substitutes -extremely high barriers to entry Ex: -

laws designed to prevent firms from engaging in behaviors that would lessen competition are called ________ laws

antitrust

laws designed to prevent firms from engaging in behaviors that would lessen competition in a market are called

antitrust laws

anti trust laws

are designed to prevent firms from engaging in behaviors that would lessen competition

the strategy of distinguishing one firm's product from the competing products of other firms is called product ________

differentiation

which of the following is not a characteristic of an oligopoly?

producers who are price takers

oligopolistic firms can influence the prices they charge for their products, but their behavior needs to be _______, given that they face other competitors in their industries

strategic