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Ch 7 Markets
Spalding Academy 10th Econ
| Question | Answer |
|---|---|
| Government efforts aimed at preventing monopoly and promoting competition in markets where competition is desirable | Antitrust activity |
| Anything that prevents new firms form competing on an equal footing with existing firms in an industry | Barriers to entry |
| A group of firms that agree to coordinate and pricing decisions to maximize group profits by behaving a monopolist | Cartel |
| A product that is identical across sellers, such as a bushel of wheat | Commodity |
| A regulation in government control over prices and firm entry in previously regulated markets, such as airlines and trucking | Deregulation |
| The ability of a firm to raise its price without losing all its customers to rivals | Market power |
| Important features of a market such as the number of buyers and sellers, product uniformity across sellers, ease of entering the market, and forms of competition | Market structure |
| The combination of two or more firms to form a single firm | Merger |
| A market structure with no entry barriers and many firms selling products differentiated enough that each firm’s demand curve slopes downward | Monopolistic competition |
| A sole supplier of a product with no close substitutes | Monopoly |
| A market structure with a small number of firms whose behavior is interdependent | Oligopoly |
| A market structure with many fully informed buyers and sellers of an identical product with no barriers to entry | Perfect competition |
| What are the four features that identify different market structures? | Numbers of buyers and sellers, product’s uniformity across suppliers, ease of entry into the market, forms of competition among firms |
| How does the market structure of monopolistic competition contain elements of both "monopoly" and "competition"? | Monopolistic: each firm has some control over price, competition: barriers to entry are low |
| How can a firm introducing a new frozen pizza product to the market differentiate their product? | Physical differences, location, product image, etc |
| Differentiate between "horizontal mergers" and "non-horizontal mergers." | horizontal: merger involving firms in the same market, non- horizontal: mergers involving firms in different markets |
| What would happen to the market of a firm that found, patented, and received FDA approval to market a drug that prevents HIV infections? Why might such a firm not charge an extremely high price for this drug? | Millions of people would want to take this drug to prevent getting HIV. Willing to pay a high price for it. Firm will avoid high prices to prevent public outcry and gov’t regulation |
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rejoyce431
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