Economics Chapter 9 Review

What is a Monopoly

A form of market organization in which there's only one supplier in the industry, no other products than the one, they control the price, impossible for entry/exit.

What is an industry?

A group of businesses that share common concerns, products, costumers, and products.

What is a barrier of entry?

A significant obstacle that prevents or hinders a new firm from entering an industry.

What used to be the largest privately owned company in the world?

AT&T

Collusion

An agreement that is among a small number of producers to reduce their output and increase prices

Duopoly

An oligopoly made from only two business firms

What is an Oligopoly?

Contains only a few firms, and their products can be either highly differentiated or undifferentiated, control of price if they are differentiated, many barriers of entry

Which of the following are not outlawed by Clayton Act

Corporate takeovers

What is the difference between differentiated and undifferentiated products?

Differentiated: visibly different from one firm to the other. Undifferentiated: exactly alike regardless of the firm that produced them.

What does FTC stand for and what does it do?

Federal Trade Commission; Its purpose is to enforce the Clayton Act

How does imperfect competition differ from perfect competition?

Goods are slightly differentiated, so each seller has some control over his goods' price.

What industry multiplied Andrew Carnegie's wealth

Iron and Steel

A firms ability to control price related directly to?

Its ability to differentiate its products.

Who first created Imperfect Competition?

Joan Robinson

What is Imperfect Competition?

Many producers of slightly differentiated goods, large number of firms, affect price slightly, relative ease of entry.

What is Perfect Competition?

Many producers sell identical products. Many manufacturers, undifferentiated products, no control of price, entry/exit with ease.

What are the two different types of barriers to entry?

Natural barrier: an industry owns all of a vital/natural resource. Artificial barrier: governmental regulations. (patents)

What is the difference between a natural monopoly and a legal monopoly?

Natural: barrier blocking entry that is natural Legal: government allows a firm exclusive rights to provide good/service.

What are the fundamental differences that distinguish one market from another?

Number of firms, Product differences, Control of price, Entering/Exiting the industry.

What is the most well known and successful cartel?

OPEC

What type of monopoly directly relates to Collusion

Oligopoly

What does Oligopoly mean? and Monopoly?

Oligopoly: selling by a few Monopoly: one seller

What types of competition exist in the market?

Perfect, Imperfect, Oligopoly, and Monopoly

What two verses show the benefits of competition?

Proverbs 10:4 and 13:4- Those who work hard and use skill rise above the carless

What was the first law against trusts?

The Sherman Antitrust Act of 1890

Market

The arrangements that people have developed for trading with one another

What barrier keeps many oligopolies from having multiple competitors?

The high cost of entering the market

What did the Clayton act do?

To enumerate and clarify certain anticompetitive practices, including interlocking directorates, tying contracts, anticompetitive takeovers, and price discrimination

What gives legal protection to a company for their product?

Trademarks

Trust

When the head of the largest company in the industry would persuade the other firms to put their stock into a trust account

What is synergy?

When the total is grater than the sum of the parts.