Barriers to Entry
This term refers to anything that prevents new firms from entering a market.
What are barriers to entry?
A monopoly has exactly this number of sellers.
What is one?
In perfect competition, sellers are considered price ________, not price makers.
What are price takers
This market structure has many firms selling similar but not identical products.
What is monopolistic competition?
An oligopoly is a market controlled by how many large firms?
What is a few?
This type of monopoly is created and operated by the government when private firms won’t enter an industry.
What is a government monopoly?
High ________ costs discourage new firms from producing goods because the price to begin production is too high.
What are start-up costs?
A monopoly sets its own prices because it is considered a ________ maker.
What is a price maker?
In perfect competition, products sold by different firms are all the same. This is called what type of product?
What is homogeneous?
These differences—such as flavor, packaging, or service—help firms in monopolistic competition stand out.
What is non-price competition?
When companies cooperate secretly to set prices, it is called what?
What is collusion?
This government action gives a company exclusive rights to produce a good for a set period.
What is a patent?
Lack of access to tools, skills, and equipment is an example of this barrier.
What is technology?
These government protections—such as for inventions, books, and music—can create temporary monopolies.
What are patents and copyrights?
Name one example of a product in perfect competition.
What is milk, wheat, or beans?
Fast food companies compete this way by using ads, branding, mascots, and slogans.
What is advertising?
This illegal practice occurs when competing sellers agree to maintain prices at a certain level.
What is price fixing?
Monopolies can hurt consumers if prices rise too high. What prevents this from happening in a regulated natural monopoly?
What are government price controls?
When prices are low, firms produce less because each unit still has a cost. This relationship between price and production is called what?
What is price and output?
Standard Oil had this advantage in the marketplace, allowing it to undercut competition.
What is economies of scale / control of oil refining? (Either works)
Perfect competition requires this type of information so buyers know ingredients and firms cannot hide anything.
What is perfect information?
Even though products differ slightly, monopolistic competition still has ______ barriers to entry.
What are low barriers?
A cartel is a formal agreement among producers to control supply and manipulate prices. Name one famous example.
What is OPEC?
What does OPEC stand for?
What is the Organization of the Petroleum Exporting Countries?
High startup costs keep firms out of a market, but once a firm produces more, the cost per unit drops. This concept explains why monopolies form.
What are economies of scale?
This type of monopoly occurs when only one company can efficiently provide a service due to extremely high infrastructure costs.
What is a natural monopoly?
How can a firm operating in perfect competition generate more income?
Increase efficiency, or expand operations, they can not raise prices.
This factor of non-price competition can include drive-thru speed or whether “the ice cream machine works.”
What is service level?
In oligopoly, companies must consider how other firms will react before making decisions. This makes them what?
What is mutually dependent?
When technology changes and new ways of producing or distributing goods appear, this can happen to old monopolies.
What is the monopoly ends / loses its control?