Economics Chapter 8

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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


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