Topic 4: Competition & Market Structures

Which of these are features of pure competition?

• many firms

• barriers to entry

• identical products

• high barriers to entry

Which of the following best defines a monopoly?

• A market where a single individual owns all of the companies in the market.

• A market where a single entity is large enough to set prices without impacting demand.

• A market where there are many well-informed buyers and sellers.

• A market where one individual owns companies through the entire distribution line, from raw materials to distribution of finished goods.

Government regulations exist to discourage monopolies in the U.S. economy.

• True

• False

As a market structure, ____________ offers goods and services that do not have substitutes outside the industry.

• monopoly

• oligopoly

• monopolistic competition

• pure competition

The federal government has a number of policies that keep firms from controlling the price and supply of certain important goods. The government policies are known as __________.

• predatory pricing

• deregulation

• trust busting

• antitrust laws

The government can create monopolies in multiple ways. A ​ (a)   gives a company exclusive rights to sell a new good or service for a specific period of time. On the other hand, governments can issue ​ (b)   , which grants businesses to operate a business, when there are scarce resources involved.

• patent
• licenses
• franchise
• business license
• regulations

Some economists call an industry a(n) _______ if the four largest businesses produce at least 70-80% of the output. This is a market controlled by a few.

• oligopoly

• monopoly

• pure competition

• monopolistic competition

A product that is considered the same regardless of who makes it, is considered a "good".

• True

• False

A(n) _______ monopoly is a market that runs most efficiently when one large firm provides that service or good.

• natural

• government

• franchise

• industrial

When companies cut their prices very low to win business, this can start a(n) ​ (a)   , which can be great for consumers but harmful for producers. But when members of a(n) ​ (b)   , agree among each other to illegally set prices, this is considered ​ (c)   . An outcome of this "agreement" is called ​ (d)   ​where firms agree to sell products at the same or very familiar price.

• price war
• oligopoly
• collusion
• price fixing