Economics H

1
Economics (H) Chapter 7 Review Game
2
(No Transcript)
3
The nature and degree of competition among firms
operating in the same industry.
Market Structure
A1
4
Allow to do
French word for military strategy to defend
country. SMILE
Laissez Faire
A2
5
Market characterized by a large number of
well-informed independent buyers and sellers who
exchange identical products.
Perfect Competition
A3
6
Market structure in which a few very large
sellers dominate the industry.
Oligopoly
A4
7
Market structure that has all the conditions of
perfect competition except for identical
products.
Monopolistic Competition
A5
8
In a Perfect Competition, what influence could an
individual firm have on market price?
Each individual firm is too small to influence
market price.
A6
9
In an Oligopoly, what influence could an
individual firm have on market price?
Due to so few firms in the market, any change in
price will result in a reaction from the other
firms.
A7
10
In a Monopolistic
Competition, what is the
formula for Profit Maximization?
Marginal Revenue Marginal Costs.
A8
11
In an Oligopoly, what is the impact of one firm
Increasing Price?
One firm raises price in the hopes that the other
firms will follow and increase price.
A9
12
Concerning Nonprice Competition, what is the
importance of Advertising?
By being able to differentiate a product form
others, consumers will recognize it easier.
A10
13
Market structure with only one seller of a
particular product.
Monopoly
B1
14
Situation in which the average cost of production
falls as the firm gets larger.
Economies of Scale
B2
15
B3
16
B4
17
Monopoly based on the absence of other sellers in
a certain location.
Geographic Monopoly
B5
18
Market situation where the costs of production
are minimized by having a single firm produce the
product.
Natural Monopoly
B6
19
Why is a Natural Monopoly such as a
Public Utility Company
that produces water allowed to exist?
Having two plants would duplicate efforts and be
wasteful.
B7
20
Concerning Profit
Maximization, how is a Monopoly different than
other forms market structures?
Since a monopoly is a price maker, there is no
equilibrium price because of no competition.
B8
21
How does a Monopoly lead to
Inefficient Resource Allocation?
Without competition, there is no incentive to use
resources carefully.
B9
22
How can a Monopoly create an
Artificial Shortage?
Without competition, a Monopoly can reduce total
output while at the same time increasing prices.
B10
23
Market where any of the four requirements for a
competitive market are missing.
Market Failure
C1
24
Products that are collectively consumed by
everyone, and whose use by one individual does
not diminish the satisfaction or value available
to others.
Public Goods
C2
25
Unintended side effect that either benefits or
harms a third party not involved in the activity
that caused it.
Externality
C3
26
A benefit received by someone who had nothing to
do with the activity that generated the benefit.
Positive Externality
C4
27
The harm, cost, or inconvenience suffered by a
third party because of actions by others.
Negative Externality
C5
28
What is a good example of Resource Immobility?
Unemployment caused by the closing of a military
institution in an impoverished area.
C6
29
Why MUST the government supply a Public Good?
A market economy produces only those goods that
can be withheld if people refuse to pay for them.
C7
30
What type of Market Failure do things like
Unemployment and Lack of
Entrepreneurship create?
Resource Immobility
C8
31
Illustrating Market Failure
ILLUSTRATE EXPLAIN
Artificial Shortage
S2
P
S1
Without competition a Monopoly can cut back
production causing the supply curve to shift to
the LEFT, and EP will increase.
EP2
EP1
D1
C9
Q1
Q2
32
Illustrating Market Failure
ILLUSTRATE EXPLAIN
Internalizing Externalities
S2
P
S1
The purpose of raising a tax on a company is to
have them pay for the negative externality, but
in reality only EP will increase as supply
decreases.
EP2
EP1
D1
C10
Q1
Q2
33
Legally formed combinations or corporations or
companies.
TRUST
D1
34
Ruling requiring a company to stop an unfair
business practice that reduces or limits
competition among firms.
Cease and Desist Order
D2
35
Laws that prevent sellers from making false
claims about their products.
Truth in Advertising
D3
36
The requirement that businesses reveal
information to the public.
Public Disclosure
D4
37
The practice of charging customers different
prices for the same products.
Price Discrimination
D5
38
D6
39
D7
40
What is the purpose of Anti-Monopoly Legislation?
Designed to prevent market failure due to
Inadequate Competition
D8
41
The Sherman Antitrust Act of 1890 was designed
to
Outlawed all contracts in restraint of trade to
halt the growth of trusts and monopolies.
D9
42
The Clayton Antitrust Act of 1914 was designed to
Outlawed the practice of Price Discrimination
D10
43
Protects and enhances the natural resources and
natural beauty of the United States.
EPA
E1
44
Enforce laws to ensure purity, effectiveness, and
truthful labeling of food, drugs, and cosmetics.
FDA
E2
45
Regulates and supervises the sale of listed and
unlisted securities and those who sell them.
SEC
E3
46
Licenses and regulates radio and television
stations and regulates interstate telephone and
telegraph services.
FCC
E4
47
Administers antitrust laws forbidding unfair
competition, price fixing, and other deceptive
practices.
FTC
E5
48
Regulates civilian use of nuclear materials and
facilities.
NRC
E6
49
E7
50
E8
51
What is a good example of Internalizing
Externalities?
Polluting firm pays taxes to clean up the problem
instead of a third party suffering.
E9
52
What is the purpose of Public Disclosure?
Provides the market enough information to avoid
market failure due to inadequate information.
E10
53
An exclusive right to manufacture, use, or sell
any new and useful invention for a specific
period.
PATENT
F1
54
Real or imagined differences between competing
products in the same industry.
Product Differentiation
F2
55
According to Adam Smith, what should be the
Role of Government an economy?
Protect private property, enforcing contracts,
and protecting the economy from foreign
competition.
F3
56
Formal agreement to set prices or to otherwise
behave in a cooperative manner.
COLLUSION
F4
57
Monopoly that is owned and operated by a public
agency due a need of society.
Government Monopoly
F5
58
What could be a Negative
Externality surrounding the Expansion of
Hopkins Airport?
The increase in the noise pollution related to
it.
F6
59
The use of advertising or promotional campaigns
to convince buyers to purchase a product.
Nonprice Competition
F7
60
In an Oligopoly, what is the impact of one firm
Decreasing Price?
When one firm decreases prices, the other firms
will follow suit and a price war may commence.
F8
61
Why is an Externality classified as a
Market Failure?
Because their costs and benefits are not
reflected in the market price paid for the
original product.
F9
62
What type of Market Failure do things like
Inefficient Resource Allocation and
Artificial Shortage create?
Inadequate Competition
F10