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Flashcards in Market Structures Test Deck (21)
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Define Barrier to Entry

-obstacles that limit the ability of new companies to enter the market
-allows existing firms to earn profits in the long run


Define Cartel

a pure monopoly and is very rare


Define Deregulation

-Reduction of government oversight and control of business
-Results in lower prices because there is more competition
-May lead to fewer protection for consumers


Define Market Structure

Economic model that allows economists to examine competition among businesses in the same industry


Define Monopolistic Competition

-many sellers with similar goods and services
-aka polyopolies
-most markets are this


Define Monopoly

-One seller
-Restricted and regulated market
-Control of prices


Define Oligopoly

-Few sellers/similar product
-Large firms
-Consumer choices are limited


Define Predatory Pricing

the pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market.


Define Price Fixing

conspiring among or between businesses to set the price of competing products


Define Product Differentiation

the attempt to distinguish a product from similar products


Define Public Disclosure

a policy requiring businesses to reveal product information to buyers


Define Regulation

-Controlling behavior through rules and laws
-Promotes competition by prohibiting unfair business practicing


Define Standardized Product

a product that consumers consider identical in all essential features to other products in the same market


What are the characteristics of imperfect competition?

-occurs in markets with few sellers or products that are not standardized
-Producers are hindered by barriers to entry in market structure


What are the characteristics of perfect competition?

-ideal model of a market economy
-never can be perfect
-Most competitive market structure
-Tons of buyers and sellers
-Standardized products
-freedom to enter and exit
-Independent buyers and sellers
-Well informed buyers and sellers


How are the monopolists able to control prices?

They can raise prices as they please because they have no competition


What are examples of standardized products?

paper towels, eggs, milk, anything that is the same no matter where you get it


Define Natural Monopoly and provide an example

a type of monopoly that operates most efficiently with only one producer; water companies


Define Government Monopoly and provide an example

a market in which the government is the only legally permitted producer or service provider; post office


Define Technological Monopoly and provide an example

special rights given to those who invent a new product to create some type of work; idk examples


Define geographic Monopoly and provide an example

A condition that exists in a local area or region wherein one company is the sole provider of a good or service; general stores in small towns