Monopoly
These cause a producer's average cost to drop as production rises.
Consumers generally buy this type of product from the seller with the lowest price since the product is considered the same no matter who sells it.
What is a commodity?
These are two industries in this market structure.
What are:
* airlines
* cars
* smart phones
* mortgage lenders
* breakfast cereals
* soft drinks
This market structure is sort of a combination of these other two market structures.
What is perfect competition and monopoly?
This is a practice used by bigger businesses to drive the smaller competitor out of business, even if the bigger business loses money in the short term.
What is predatory pricing?
These are market that run most efficiently when one large firm provides all of the output because it would be difficult for more than one seller to stay in business if they have to share the market's demand.
What are natural monopolies?
These are low in perfect competition, and may include high start up costs.
What are the barriers to entry?
This is the terms to describe when two or more producers in an oligopoly conspire with each other to set price and output levels.
What is collusion?
This is the term used to describe the slight differences between products in this market structure.
What is differentiation?
The government makes these in order to keep firms from controlling the price and supply of important goods.
What are antitrust laws?
Some examples of these are high start up costs, government licenses, and patents.
What are barriers to entry?
This is how much profit a purely competitive firm will make in the long run.
What is none?
This is the name of a well-known cartel which is uncommon because of how long it has endured, which cartels normally can't do because their agreements break down.
What is the Organization of Petroleum Exporting Countries (OPEC)?
These are the four characteristics of monopolistic competition.
What are:
1. many buyers/sellers
2. slight differentiation of product
3. easy entry/exit to/from the market (few barriers to entry)
4. sellers have slight control over price
Along with antitrust laws, the government does this in order to promote competition.
What is deregulation?
This might change only in a monopolistic market, because since there is only one seller, he will have to lower price in order to increase demand.
What is marginal revenue?
The sellers are called this in a perfectly competitive market, because they have no control over price.
What are price takers?
This is uncommon in an oligopoly. It would harm producers, but benefit consumers.
What is a price war?
These are the four types of non-price competition used by sellers in this market structure.
What are:
1. physical characteristics
2. location
3. service level
4. status/image/advertising
In order to be approved for one of these, firms have to prove to government regulators that they will lower overall costs, leading to lower prices for consumers.
What is a merger?
A monopolist may practice this in order to maximize profits by getting all buyers to purchase at each group's maximum price they are willing to pay.
What is price discrimination?
These are the four conditions for perfect competition.
1. many buyers and sellers
2. identical product
3. easy entry/exit to/from the market
4. buyers/sellers well-informed about product
Unlike with perfect competition and monopolistic competition, this can be earned in the long run in an oligopoly.
What is profit?
This is one reason why profits in this market structure will always go away in the long run.
What is:
fierce competition between sellers
OR
new firms will enter the market with a slightly different product that costs less
Currently these two grocery firms are seeking approval for a government merger.
What are Albertson's and Kroger?