Pure Competition
The 4 characteristics of Pure Competition.
What is:
Many Firms
identical/single good
No barriers to entry
no control over price
The number of sellers in a true monopoly.
What is 1 firm/seller?
In a monopolistic competitive market firms compete with each other selling similar goods. Each firm holds a ____________ over its own particular product design.
What is a franchise?
A business similar to a cartel, but regulated by the gov't.
What is a trust?
The only decision that a supplier in a pure competition market has to make.
What is how much to supply?
A product that is the same no matter who produces it.
What is a commodity?
This gives a company exclusive rights to sell a good or service for a specified time period.
What is a patent?
OPEC is one of the most known __________ in the world.
What is a cartels?
Increase competition.
The ability to control prices and total market output.
What is Market power?
Crude oil's characteristic of a purely competitive market is
unlimited sellers
no substitutes close to price
packaged the same way
product same no matter what
The product is the same no matter what.
The average cost of production falls when a firm produces more is referring to.
Economies of scale
EX sheet rock business
Physical characteristics, location, and advertising, image, or status are all forms of.
What is non-price competition?
The act of cutting prices so low in attempt to push other firms out of business.
What is predatory pricing?
The government usually grants a firm the authority to sell its goods within a specific market, like national parks.
What is a franchise?
The 2 types of barriers to entry for Pure competiton are.
What is high start up costs and complex technology?
Amtrak, the only train service provider in the US is in a market where it is more efficient to have one large firm provide all the service in the market, is an example of.
What is a natural monopoly?
Airlines, automobiles, cereals, and appliances are all examples of a/an ___________.
What is an oligopoly?
This company was broke up into 7 different competing firms in order to break up the monopoly that it controlled.
What is AT&T?
Sony, Universal, and Warner are the three leading music companies. The fact that 3 firms control the market is an example of a/an ____________.
What is an oligopoly?
Who would benefit more from a purely competitive market structure, producers or consumers? Explain.
Consumers benefit significantly more than producers in a purely competitive market structure. Because many sellers offer identical products (commodities), competition drives prices down to the lowest possible cost, maximizes choice, and ensures high efficiency. Producers, conversely, are "price takers" with little control over pricing, often earning only minimal profits
Dividing customers into multiple groups to take advantage of the differing maximum prices that their customers are willing to pay.
What is price discrimination?
This is the condition of monopolistic competition that is missing:
Many firms
little control over price
differentiated products
What is few barriers to entry?
Deregulation _________ firms to the market.
Increases.
One bottle of OJ with calcium vs another bottle from another firm without calcium is an example of _____________.
What is differentiation?