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9:MarketStructure...
This is a review over chapter 9 of the third edition economy textbook.
| Question | Answer |
|---|---|
| market | Refers to the arrangements that people have developed for trading with one another, and competition is the struggle each firm experience as it seeks to survive and then thrive within those arrangements. |
| Industry | A group of businesses that share common concerns: products, a certain group of customers, or produce their products in a similar way. |
| Differentiated products | Products that are visibly different from one firm to another. |
| Undifferentiated products | Products that are exactly alike regardless of which firm produced them. |
| What are the different categories that allow one to determine the type of competition? | Control of price, Entering/exiting the industry, number of firms, product differences |
| What was Andrew Carnegie? | They were a businessman and philanthropist. |
| Who said "The man who dies . . . rich dies disgraced." | Andrew Carnegie |
| Barrier to entry | Any significant obstacle that prevents or hinders a new firm from entering an industry. |
| Natural barriers to entry | Occurs when firms already in the industry own all of a vital natural resource that a new firm would need to enter the market or when production costs favor high-volume production voer production in small quantities. |
| Artificial barriers to entry | Results from governmental regulations, such as licensing requirements or patents, which are exclusive rights to manufacture new inventions. |
| Perfect competition | exists when there are many producers selling an identical product, no single firm controls the price, and the businesses find it relatively easy to enter and exit the market. |
| How many firms are in perfect competition? | There are a great many manufacturers, each of which has a very small share of the total market. |
| What are the product differences are in perfect competition? | There arn't any. |
| Do industries of perfect competition have the ability to control the product's price? | No individual firm can control the price. |
| How easy is it to enter/ exit the industry? | It is very easy. |
| Imperfect competition | There are many producers of slightly differentiated goods, and each firm has some control over price and can enter or exit the market with relative ease. |
| Oligopoly | Contains only a few firms, and their products can earthier highly differentiated or undifferentiated. Each firm has a great deal of control over price and would find it relatively difficult to enter and exit the industry. |
| Tight oligopoly | An industry in which the top four firms accounts for 75% of the market sales. |
| Loose oligopoly | An industry in which the top four firms account for 50-75% of the industry's total sale. |
| duopoly | An oligopoly composed of exactly two business firms. |
| cartel | When producers form collusive agreements in countries in which they are legal or when the agreements span across national borders, the cooperating producers may choose to formalize their agreements bu contracts or other official statements. |
| What is the full name of the OPEC? | The Organization of the Petroleum Exporting Countries |
| How many nations produce and export crude oil form the OPPEC cartel? | 13 |
| What is the full name for the FCC? | Federal Communications Commission |
| What is the FCC? | Something that forces laws upon oligopolies, therefore leaving them with very few competitors. |
| Monopoly | A form of market organization in which there is only one supplier in the industry. |
| Who was Joan Robinson? | She was a woman who developed the concept of imperfect competition. She should have won the Nobel prize, however, because she was a woman or because of her legal beliefs, she never received such prize. |
| Natural Monopoly | When one owns or controls 100% of a resource that is essential to an industry. |
| Legal monopoly | Exists because the government has allowed a firm an exclusive right to provide a good or service. |
| Trust | Occurs when the head of the largest company in the industry would persuade the other firms to put their stock into a trust account. |
| What was the response to the tremendous control of the market by the trusts? | Sherman Antitrust Act of 1890 |
| What act closed most of the gaps found in the sherman act; as it enumerated, clarified and made illegal certain anticompetitive practice's including interlocking directorates, tying contracts, anticompetitive takeovers, and price discriminations. | The Clayton Act of 1914 |
| Interlocking directorates | Firms where skirting the sherman act by placing one or more directors on the boards of competing firms. |
| Tying contracts | A few big companies, to secure more business for themselves, would require that the smaller companies desiring to buy from them had to purchase their full line of products. |
| Anticompetitive takeovers | Corporations were taking over other firms by purchasing their common stock, limiting competition significantly. |
| Price Discrimination | Firms were selling the same good to different buyers at different prices. |
Created by:
hihello2007
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