Market Power
What kind of effect do monopolies and oligopolies have for the consumer and economy?
A negative effect
What are government policies that keeps firms from controlling the price and supply of goods called?
What is...
Antitrust Laws
Besides regulating practices and breaking up monopolies, how else can the government prevent monopolies?
What is...
Blocking mergers
Deregulation has met with ____ results.
What is...
Mixed
Trust
What is...
An illegal grouping of companies that discourages competition
What is it called when firms set the market price lower than their costs?
What is...
Predatory pricing
What two aspects of the government watches over firms?
What is...
The Federal Trade Commission and the Department of Justice
How do mergers occur?
What is...
When a company joins with another to form a single firm
Name three things the government has deregulated.
What is...
-Airlines
-Trucking
-Banking
-Railroads
-Natural gas
-TV broadcasting industries
Antitrust Laws
What is...
Laws that encourage competition in the marketplace
Why is predatory pricing ineffective in the long term?
What is...
Losing money each time rivals are driven out of business
A ____ is a business combination similar to a cartel.
What is...
Trust
Name one way mergers can benefit consumers.
What is...
- Reducing the cost of production and the price of goods
- Creating a better product and service
The growth of new firms following deregulation has also led to...
What is...
The disappearance of some existing firms
Deregulation
What is...
The removal of some government controls over a market
Name two ways a firm might try to increase its market power.
What is...
- Forming a cartel
- Merging with one another
- Practicing predatory pricing
What phone company did the government break up in 1982 due to their legal monopoly being taken advantage of?
What is...
American Telephone & Telegraph (AT&T)
How can mergers succeed?
What is...
By proving to the government that it is more beneficial than harmful.
While ____ weakens government control, ____ strengthens it.
What is...
Deregulation, Antitrust laws
Mergers
What is...
Combinations of two or more companies into a single form
What pattern is found in markets dominated by a few large firms?
What is...
Tending to have higher prices and lower outputs than markets with many sellers
True or False:
Microsoft accused the government of unfairly putting the company at a disadvantage due to the antitrust laws.
What is...
False
What does FTC stand for?
What is...
Federal Trade Commission
What caused revenues to plunge and the cost of security and insurance to rise in the airline industry?
What is...
The terrorist hijackings on September 11, 2001
Predatory Pricing
What is...
Selling a product below cost to drive competitors out of the market