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Economics
Chapter 8 Review
1A(n) ___________ market has many buyers and sellers that all sell identical goods.
Perfectly competitive
2A type of economic competition whereFew sellersIdentical or slightly differentiated products
Significant barriers to entryOligopolistic market
3A clothing store faces this type of competition.
Monopolistic competitive
4A seller that can sell its good only at the equilibrium price would be considered a(n) __________.
Price taker
5Exists when a seller charges different prices to different buyers and the price differences do not reflect cost differences.
Price discrimination
6In which type of market do all firms produce exactly the same type of good?
Perfect competition
7OPEC is an example of a
Cartel
8In which type of market do buyers and sellers have all the relevant information about prices, product quality, and supply?
Perfect competition
9A soybean farmer faces this type of competition.
Perfectly competitive
10In a monopoly, sellers are _________.
Price searchers.
11Airlines operate in this type of market.
Oligopolistic.
12Firms in monopolistic competitive markets are _______.
Price searchers
13A market structure with
Many buyers & sellersIdentical productsSellers & buyers have all relevant information
Easy entry & exit Perfect competition
14An agreement that specifies that firms will act in a coordinated way to reduce competition among them.
Cartel agreement
15Legislation passed for the stated purpose of controlling monopoly power and preserving and promoting competition.
Antitrust law
16Firms in perfectly competitive markets are __________.
Price takers
17A type of economic competition whereThere is one sellerThe product has no close substitutes
The barriers to entry are high
Monopoly
18Which market structure relies heavily on advertising to differentiate their products?
Monopolistic competition
19When a single producer has complete control over one kind of good or service, the market structure is called _________.
Monopolistic
20When it comes to determining price, sellers in a perfectly competitive market have __________.
No control
21Firms in oligopolistic markets are __________.
Price searchers
22In a perfectly competitive market, products must be ____________.
Identical
23Making secret agreements that effectively reduce competition.
Colluding
24The market structure that consists of one seller who sells a product that has no close substitutes is called a(n) ____ market.
Monopoly
25A(n) ________ is formed when firms decide to act in a coordinated way to reduce the competition among them and raise their profits.
Cartel agreement
26A type of competition where there areMany buyers and sellersProducts are slightly differentiated
No barriers to entryMonopolistic competition
27A _______ exists when the government grants a firm the exclusive right to provide a particular good or service and excludes all others from doing so.
Public franchise
28Things such as patents or copyrights, which make it difficult for a new business to open in a particular market, are considered __________.
Barriers to entry
29Laws meant to control monopoly power and to preserve and promote competition are referred to as _________ laws.
Antitrust
30A firm with such a low average total cost that only it can survive in the market.
Natural monopoly
31A right granted to a firm by government that permits the firm to provide a particular good or service and excludes all others from doing so.
Public franchise.
True/False Statements
Chapter 8 Review
1Monopolists are always profitable.
False
2The U.S. automobile industry operates in a perfectly competitive market.
False
3The vast majority of firms face perfect competition.
False
4Cartel agreements are legal in the U.S.
False
5Senior citizens discounts are an example of illegal price discrimination.
False
6Monopolists can charge whatever price they want and still be profitable.
False
7It is difficult for monopolists to know what price to charge.
True
8It is easy for sellers in a perfectly competitive market to raise their prices whenever they feel like it.
False
9Price takers can sell all their goods at the equilibrium price.
True
10Entry into and exit from an oligopolistic market is easy.
False
11When price rises in a perfectly competitive market, new producers will enter the market.
True
12When a firm operates as a monopoly, it means there are high barriers of entry for competitors to enter the market.
True
13A characteristic of the farming industry is the ability of producers to slightly differentiate their products.
False
14Sellers who produce identical products produce the quantity of output at which marginal revenue equals marginal cost.
True
15As the supply of goods in a market increases, it causes the price to fall until firms no longer see an incentive to enter the market.
True
16For a monopolistic competitor, a rise in the price of its good will not cause all its customers to leave it and select the competitor's product.
True
Final QuestionPure
Competition
Monopoly Monopolistic
Competition
Oligopoly
Description
Price Taker or Price Searcher?
Non-price competition?