Market Structure
What kind of market structure has many sellers offering identical products?
What is perfect competition?
Which type of monopoly is created by government regulation?
What is a legal monopoly?
What is One common barrier to entry?
difficulty of attracting customers.
Who enforces the Clayton Antitrust Act?
What is the Federal Trade Commission (FTC)?
What is the economic definition of an industry?
A group of businesses that share common concerns.
Which type of market is characterized by a few sellers and mutual interdependence?
What is an oligopoly?
Why are monopolies often found in public utilities?
Because natural or legal barriers make competition difficult.
What are businesses that reflect market prices called?
What are price takers?
What activity was outlawed by the Clayton Act involving board members on multiple firms?
What is an interlocking directorate?
What is a cartel?
A formalized agreement between firms to control price/output.
In what type of competition can companies easily enter and exit the market, and have little control over prices?
What is perfect competition?
What was America's first major legislation against monopolies?
What is the Sherman Antitrust Act?
Give an example of a natural barrier to entry.
Ownership of all necessary resources or economies of scale.
What law made tying contracts illegal?
What is the Clayton Act?
Define synergy.
When combined effort produces more than the sum of individual efforts.
What differentiates tight oligopolies from loose oligopolies?
What is the percentage of market sales controlled by the top four firms?
Why might monopolies have little incentive to improve their products?
Because they have little or no competition.
What causes imperfect competition firms to control prices?
Product differentiation.
What is the purpose of antitrust laws?
To prevent unfair competition and protect consumers.
What is a trust in economic terms?
A combination of firms managed as a single enterprise to control markets.
What is the most common market structure in the U.S. today?
What is imperfect competition?
What is the difference between a natural and a legal monopoly?
A natural monopoly is due to resource/control advantages; a legal monopoly is due to government protection.
What’s the main difference between natural and artificial barriers to entry?
Natural barriers arise from market conditions; artificial barriers are government-created.
What is collusion, and which market structure is most prone to it?
An agreement to limit competition; oligopolies.
What is product differentiation?
The ability to make a product appear unique compared to others in the market.