MARKET STRUCTURESREVIEWEconomics

Mr. Bordelon

Key Terms

_____ is when a monopolist divides consumers into groups and charges different prices for the same good.

Key Terms

Price discrimination is when a monopolist divides consumers into groups and charges different prices for the same good.

Key Terms

A market with many firms producing the same good is in _____.

Key Terms

A market with many firms producing the same good is in perfect competition.

Key Terms

Economists define _____ as a market structure with a few large firms, each of which has some market power.

Key Terms

Economists define oligopoly as a market structure with a few large firms, each of which has some market power.

Key Terms

_____ are products that are identical no matter who produces them.

Key Terms

Commodities are products that are identical no matter who produces them.

Key Terms

A(n) _____ grants the right to sell an invention without competition.

Key Terms

A patent grants the right to sell an invention without competition.

Key Terms

A(n) _____ may exist in market where it is most efficient for only one large firm to provide a product.

Key Terms

A natural monopoly may exist in market where it is most efficient for only one large firm to provide a product.

Key Terms

Economists use the term _____ to describe agreements among firms to set prices and production levels.

Key Terms

Economists use the term collusion to describe agreements among firms to set prices and production levels.

Key Terms

Monopolies benefit from _____, where production costs go down with each additional unit produced, and in turn, profits increase.

Key Terms

Monopolies benefit from economies of scale, where production costs go down with each additional unit produced, and in turn, profits increase.

Key Terms

_____ is an agreement among firms to charge one price for the same good.

Key Terms

Price fixing is an agreement among firms to charge one price for the same good.

Main Ideas

Compare and contract natural monopolies and government monopolies.

Main Ideas

Compare and contract natural monopolies and government monopolies. Natural monopolies exist in markets where

it would be inefficient for more than one producer to exist.

Government monopolies provide franchises, licenses, patents or copyrights for specific purposes.

Both allow monopolies to exist.

Main Ideas

What four conditions are necessary for a market to be considered monopolistically competitive?

Main Ideas

What four conditions are necessary for a market to be considered monopolistically competitive? Many firms Relatively easy market entry (few barriers) Similar, but differentiated products Slight control over price

Know the conditions for all four market structures.

Main Ideas

Perfect Competitio

n

Monopoly Oligopoly Monopolistic

Competition

Number of producers

Many One Few/Handful Many

Variety of goods

Identical (commodity

)

Unique good

(inelastic)

Some (commodities with some differences

usually)

Some (product

differentiation)

Market entry

None/few Impossible Difficult Easy

Control over price

None Complete Some (incentives

to cooperate and cheat)

Some (slight)

Example Agriculture Utilities Oil Gas Stations

Main Ideas

How do monopolies control price?

Main Ideas

How do monopolies control price? Monopolies control price by manipulating

production.

Main Ideas

How do companies conduct non-price competition?

Main Ideas

How do companies conduct non-price competition? physical characteristics location customer service advertising

Main Ideas

What is required for a firm to conduct a successful price discrimination scheme?

Main Ideas

What is required for a firm to conduct a successful price discrimination scheme? Market power Distinct groups Difficult resale