Monopoly
What is a monopoly?
What is monopolistic competition?
Many different firms sell similar but not identical products.
Name an example of a pure/perfect competition market.
YOU CAN'T...It is a baseline and there is not a market where this truly exists.
What is the definition of oligopoly?
When a few large businesses control the market.
What is a public good?
Something that is collectively used/enjoyed by everyone. They are non-excludable, and non-rivalrous. Parks, highways, national defense
Who is the most famous person for having a monopoly?
John. D. Rockefeller
Give 2 examples of monopolistic competition companies.
Fast food, Grocery stores, Clothing, Bakeries, Nail salons, Hair salons
What controls the price in this type of market?
Supply and Demand
Give 2 examples of an oligopoly.
Cell Service Providers, Airlines, Auto Manufacturing, Railroads
Why is having all of the information important to a successful market?
If a car dealer keeps selling crappy cars to buyers knowing that they are bad, the market will eventual fail because people will stop going to buy his vehicles.
Name 1 advantage of having a monopoly.
No competition
Can set prices
True or False: Advertising is crucial for monopolistic competition.
True
What is the definition of a pure economy?
A market structure characterized by many firms selling identical products with no barriers to entry.
What does collusion mean?
It is a crime where oligopolies conspire together to change prices all at the same time to trap the consumer.
Give one example of both negative and positive spillovers.
Negative: Pollution, Covid, deforestation, traffic
Positive: Public education, neighbors flower garden (if its maintained), vaccines, healthcare
Why don't we have any true monopolies anymore?
The government stepped in to make it fair to both consumers and sellers.
Why is advertising necessary in monopolistic competition?
What is the main difference between pure competition and monopolistic competition?
Type of product for sale. Pure = identical; monopolistic = similar, but not identical
Why is it harder to enter the market as a seller in an oligopoly?
Start up costs. The businesses themselves are VERY expensive to start up.
Why is government intervention necessary when it comes to public goods?
Because there is no profit in them. They do not cost the people money other than tax payers.
Name all 4 types of monopolies that the government allows.
*Natural
*Geographical
*Governmental
What ranking of the 4 market types is Monopolistic competition in regards to competition. 1 being lowest amount competition, and 4 being the high amount of competition
3
Because a market with unlimited sellers having the exact same product would never be successful.
How do companies within an oligopoly compete?
New Features
New models
Discounts
Product Enhancers
Name all 5 ways a market can fail.
Not enough competition
Not enough information (one sided information)
Spillovers/Externalities
Resources can't/won't move
Too few public goods