Unit 4: Competition and Monopolies
no one firm dominates the market
Because of the number of firms in monopolistic competition
***There are a large number of sellers that offer similar but slightly different products/services **number of sellers for a product
Monopolistic competition differs from oligopoly because of the _____________.
Mergers (new monopolies breaking ones that already exist)
Most antitrust legislation restricts the harmful effects of ___________.
exclusive right to make, use, or sell an invention for a specified number of years
Patents
economy more competitive
The increase of information available on the World Wide Web has _____________.
taxes raised on tobacco, acohol, and food; taxes that affect low income and middle income people than the wealthy
What are regressive taxes?
Perfect: no barriers Monopolistic: barriers **differentiation
What is the difference between perfect competition and monopolistic competition?
Oligopoly
When one firm in the breakfast cereal market started an advertising campaign that started the nutritional value of its cereals, all other cereal manufacturers started similar advertising campaigns. this suggests that the breakfast cereal market is:
Interlocking directorates
Which of the following is a board of directors with members who also serve as the board of director of a competing corporation?
Pure monopoly Characteristics: 1. Single seller 2. No substitutes (good and services) 3. Barriers of entry (none b/c no one else is competing) 4. Almost complete control of market place
Which of the following is a characteristic of a pure monopoly?
Oligopolistic Examples:
Which of the following is an industry dominated by a few suppliers who exercise some control over price?
Perfect competition
Which of the following is defined as a market situation in which no single buyer or seller can affect price?
***acquisitions merger
Which of the following is defined as a process by which one corporation buys more than half the stock of another corporation?
perfect monopoly / large market
which of the following is defined as a situation in which numerous buyers and sellers exist for a product?
Oligopoly (medicine)
A cartel is most likely to occur in
Cartel?
A group of firms that gets together to make price and output decisions is called:
Collusion
A price - and quantity-fixing agreement is known as:
oligopolistic
A form of industry structure characterized by a few firms, each large enough to influence market price is:
the top four firms in the industry produce 75 % of the industry's output
A four-firm concentration ratio of 75
reduce international competition by controlling price, production, and the distribution of goods
A cartel is a collusive agreement among a number of firms that is designed to _______
1. No single seller dominates the market 2.entry to market is easier 3. sells slightly different products 4. uses differentiation adn through advertising 5. building a loyal customer base product
All of the following are ways monopolistically competitive firms differentiate their products EXCEPT
decrease ; increase
Assume that firms in an olgopoly are currently colluding to set price and output to maxmise total industry profit. If the oligopolists are forced to stop colluding, the price changed by the oligopolists will _______________ and the total output will ___________________.
straight horizontal line
For the perfectly competitive broccoli producers in California, the market demand curve for broccoli is
oligopoly
If a few firms dominate an industry the market is known as:
trickle up (always works)
In his speech, President Obama discussed Middle-Class Economics, which related to which of the following terms?
monopolistic competition has more differentiation while perfect competition is none
In monopolistic competition differs from perfect competition primarily because:
no one firm's direct actions directly affects the actions of other firms
In monopolistic competition:
