Question 1

perfect competition

Accepted Answer

a market structure in which a large number of firms all produce the same product and no single seller controls supply or prices

Question 2

commodity

Accepted Answer

a product that is considered the same no matter who produces or sells it

Question 3

barrier to entry

Accepted Answer

any factor that makes it difficult for a new firm to enter a market

Question 4

imperfect competition

Accepted Answer

a market structure that fails to meet the conditions of perfect competition

Question 5

start-up costs

Accepted Answer

the expenses a new business must pay before it can begin to produce and sell goods

Question 6

monopoly

Accepted Answer

a market in which a single seller dominates

Question 7

economies of scale

Accepted Answer

factors that cause a producer's average cost per unit to fall as output rises

Question 8

natural monopoly

Accepted Answer

a market that runs most efficiently when one large firm supplies all of the output

Question 9

government monopoly

Accepted Answer

a monopoly created by the government

Question 10

patent

Accepted Answer

a license that gives the inventor of a new product the exclusive right to sell it for a specific period of time

Question 11

franchise

Accepted Answer

a contract that gives a single firm the right to sell its goods within an exclusive market

Question 12

license

Accepted Answer

a government-issued right to operate a business

Question 13

price discrimination

Accepted Answer

the division of consumers into groups based on how much they will pay for a good

Question 14

market power

Accepted Answer

the ability of a company to control prices and total market output

Question 15

predatory pricing

Accepted Answer

selling a product below cost for a short period of time to drive competitors out of the market

Question 16

antitrust laws

Accepted Answer

laws that encourage competition in the marketplace

Question 17

trust

Accepted Answer

an illegal grouping of companies that discourages competition

Question 18

merger

Accepted Answer

when two or more companies join to form a single firm

Question 19

deregulation

Accepted Answer

the removal of some government controls over a market

Question 20

monopolistic competition

Accepted Answer

a market structure in which many companies sell products that are similar but not identical

Question 21

differentiation

Accepted Answer

making a product different from other, similar products

Question 22

nonprice competition

Accepted Answer

a way to attract customers through style, service, or location, but not a lower price

Question 23

oliogopoly

Accepted Answer

a market structure in which a few large firms dominate a market

Question 24

price war

Accepted Answer

a series of competitive price cuts that lowers the market price below the cost of production

Question 25

collusion

Accepted Answer

an illegal agreement among firms to divide the market, set prices, or limit production

Question 26

price fixing

Accepted Answer

an agreement among firms to charge one price for the same good

Question 27

cartel

Accepted Answer

a formal organization of producers that agree to coordinate prices and production

Question 28

which of these businesses has the advantage of economies of scale?

Accepted Answer

automobile assembly plant

Question 29

milk is considered a commodity because it is which of the following?

Accepted Answer

the same no matter who sells it

Question 30

patents are a form of monopoly that society allows because they

Accepted Answer

encourage firms to research and develop new products that benefit society as a whole

Question 31

in a perfectly competitive market, how much control over prices do companies have?

Accepted Answer

none

Question 32

a real-life example of a nearly perfect competition is a

Accepted Answer

farmer's market

Question 33

what kind of market runs most efficiently when one large firm supplies all of the output?

Accepted Answer

a natural monopoly

Question 34

a discounted airline far is a price discrimination that can be offered because

Accepted Answer

vacationers are willing to put with the restrictions that the airlines impose

Question 35

imperfect competition is usually caused by

Accepted Answer

barriers to entry

Question 36

what is the relationship between start-up costs and a competitive market?

Accepted Answer

high start-up costs are likely to make a market less competitive

Question 37

how does the market price of a good in a monopoly market compare with the market price of the same good in a perfectly competitive market?

Accepted Answer

the price is higher

Question 38

in a perfectly competitive market, output

Accepted Answer

is just enough to cover opportunity costs

Question 39

why do companies practice price discrimination?

Accepted Answer

price discrimination maximizes profit by charging different prices to different groups of consumers

Question 40

OPEC( Organization of the Petroleum Exporting Countries)

Accepted Answer

control oil prices by restricting production, and lower supplies send oil prices up

Question 41

if two shops sell the same merchandise but one offers a higher level of service, the service distinction is

Accepted Answer

nonprice competition

Question 42

which is true of prices in monopolistic competition?

Accepted Answer

they are higher than in perfect competition

Question 43

what is one condition needed for a cartel to survive?

Accepted Answer

all members keep agreed output levels

Question 44

the U.S government's deregulation of the airline industry caused prices to decline in many places because

Accepted Answer

competition lowered prices

Question 45

what can the government do to keep monopolies from being formed?

Accepted Answer

block mergers

Question 46

how has deregulation helped consumers in some industries?

Accepted Answer

by lowering prices

Question 47

one way that firms in a monopolistic competition engage in non price competition is through

Accepted Answer

advertising

Question 48

which of the following would be an oligopoly?

Accepted Answer

two to four firms producing 70 to 80 percent of the output

Question 49

perfect competition

Accepted Answer

many firms, no variety, no control, very low barriers, agriculture

Question 50

monopolistic competition

Accepted Answer

many firms, some variety, little/some control, low barriers, clothing/books

Question 51

oligopoly

Accepted Answer

a few firms, some variety, some control, high barriers, cars/oil (OPEC)

Question 52

monopoly

Accepted Answer

one firm, no variety, complete control, complete barriers, utilities: water and electricity

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