Exploring Economics Notgrass Lesson 30
Define monopsony—
A monopsony is a market in which there is only one buyer or only one significant buyer. Example: the military aircraft industry or the National Football League.
What do we need to keep in mind regarding markets and an uncertain economy?
All markets will eventually fail, so we should be sure that our most important investment—our very self—is in the hands of the One who will never leave us nor forsake us.
What knowledge did Communist bureaucrats lack?
All of the knowledge diffused throughout millions of producers and consumers that enables markets to work
Define oligopoly—
An oligopoly is where there are only a few large providers, and any one of those providers can have an impact on the market. Example: the passenger jet construction industry.
Define oligopsony—
An oligopsony is a market in which there are only a few major buyers, any of which can exert a significant influence on the market. Example: large national grocery store chains or tobacco companies
Why does a monopoly cause market failure?
Because a company with a monopoly does not have to set its price as a result of competition
How can taxes cause market failure?
By increasing the cost of goods and services
Define externalities and give two examples.
Externalities are the effects from supply and demand activity that affect people who are not the actual buyers and sellers in a transaction. Examples of externalities are pollution and smoking.
What is the position of a monopolist or of oligopolists sometimes called?
Market power
Define private goods
Private goods are goods that one person, household, or company owns and consumes.
Define public goods.
Public goods are goods and services that more than one person, household, or company can use at a time.
What advantage does the seller of a product or service have when that seller has a monopoly?
The seller controls the entire supply of goods or the service in a certain region without other suppliers or customers having a close substitute.
When does market failure occur?
When the market fails to allocate resources efficiently
