Transcript Market Structures Review

MARKET STRUCTURES
REVIEW
Economics
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
Competition
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