Chapter 7: Market Structures
| A | B |
|---|---|
| natural monopoly | a market that runs most efficiently when one large firm supplies all of the output |
| Government monopoly | a monopoly created by the government (utility) |
| Patent | a liscense that gives the inventor of a new product the exclusive right to sell it for a certain period of time |
What kind of a market runs the most efficiently when one large firm is allowed to produce all of the output because it is too expensive or inefficient to have more than one firm in the field?
natural monopoly
Because their costs are higher, small-scale producers can simply never compete with the larger, lower-cost producer. In this case, the natural monopoly of the single large producer is also the most economically efficient way to produce the good in question.
Which market structure is dominated by a few large firms?
Oligopoly
Oligopoly describes a market dominated by a few large, profitable firms. Collusion is an agreement among members of an oligopoly to set prices and production levels.
What happens to an industry when the government deregulates it?
When the government deregulates a product or service, what happens? The product or service is available to more people. Government control over the industry is stopped. Some government regulations over the industry are eliminated.
What is any factor that makes it difficult for a new firm?
Economics Chapter 7 Terms
| A | B |
|---|---|
| barrier to entry | any factor that makes it difficult for a new firm to enter a market |
| imperfect competition | a market structure that does not meet the conditions of perfect competition |
| start-up-costs | the expenses a firm must pay before it can begin to produce and sell goods |
What kind of market structure would your business be in if it sold bottles of water?
Bottled water is a monopolistically competitive market. There are many sellers of bottled water, but each firm tries to differentiate its own brand from the rest. c. The cola market is an oligopoly.
What are the principal conditions that allow monopolies to exist?
Barriers to entry are the principal conditions that allow monopolies to exist. Explanation: A monopoly refers to an industry or a market where there is a single seller selling a special or unique product.
How does a perfect market influence output?
Each firm adjusts its output so that its costs, including profit, are covered. Different firms each strive to make more goods and capture more of the market. Each firm makes its output as large as possible even though some goods are not sold. …
Which is market structure is there the least competition?
Firms in this kind of market produce goods that are very close substitutes. Public utilities are an example. Q. In which market structure is there the LEAST competition? Q. In which market structure is there the MOST competition?
Which is an example of a market structure?
A small number of cereal companies produce most of the cereal on the market. Q. In the 1990s, AT controlled 80% of the phone industry and was the ONLY provider of long distance phone service. This is an example of Q.
Which is an example of a monopolistic market structure?
An industry that is dominated by a few large firms is monopolistic competition. a monopoly. perfect competition. an oligopoly. Q. Choose the example that goes best with an oligopoly. Q. A market structure characterized by firms producing similar product with easy entry into the market
