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Question 1

An economic model that helps economists examine the nature and degree of competition among businesses in the same industry

Answer 1

Market Structure

Question 2

Name the factors determining the degree of competition in the market.

Answer 2

• Number and size of buyers and sellers
• Type of products
• Entry and exit of firms in the market
• Pricing power
• Degree of knowledge of economic agents

Question 3

What does market concentration refer to?

Answer 3

-Refers to the distribution of market shares among firms in the market

-It indicates how much market power firms have based on the number of suppliers

Question 4

In terms of market concentration, what does less concentration imply?

Answer 4

-More suppliers
-Less market power

Question 5

In terms of market concentration, what does more concentration imply?

Answer 5

-Less suppliers
-More market power

Question 6

What is the ability of a company to develop a product niche/heterogenous?

Answer 6

Making the product differentiated or unique

Question 7

What types of products can exist in a market?

Answer 7

-Homogenous
-Niche/Heterogenous

Question 8

Strength of barriers that may hinder the entry of firms in the market

Answer 8

Entry or Exit of firms in the market

Question 9

Price setter

Answer 9

More market power

Question 10

Ability to set or control the price of products in the market

Answer 10

Pricing Power

Question 11

Availability or limitation of economic information to the players in the markey (price, cost of materials, demand level and supply conditions)

Answer 11

Degree of Knowledge of economic agents

Question 12

Price taker

Answer 12

Less market power

Question 13

LESS INFORMATION available to the buyers

Answer 13

HIGHER MARKET POWER of suppliers

Question 14

MORE INFORMATION available to the buyers

Answer 14

LOWER MARKET POWER of suppliers

Question 15

What are the three types of Imperfect Competition

Answer 15

-Monopoly
-Monopolistic
-Oligopoly

Question 16

Characteristics of Perfect competition

Answer 16

1. Many buyers and sellers
2. Identical/ Standardized Product
3. Informed Buyers and Sellers Buyers know the prices and quality
4. Free Market Entry and Exit

Question 17

What type of market can be a perfect competition

Answer 17

Farm Markets

Question 18

-A market dominated by a single seller.
-The products have no close substitute
-They form when barriers prevent competitors from entering the market.

Answer 18

Monopoly

Question 19

Cost of production lowest with only one producer

Answer 19

Natural Monopoly

Question 20

Government owns and runs or permits only one producer

Answer 20

Government Monopoly

Question 21

One firm owns invention, technology, method

Answer 21

Technological Monopoly

Question 22

No other sellers within a region that has no other supplies in area and controls the price

Answer 22

Geographic Monopoly

Question 23

-Most real markets fall between perfect competition and monopoly
-Many seller offer similar but not identical products

Answer 23

Monopolistic Competition

Question 24

• Many firms
• Few artificial barriers to entry
• Similar but differentiated products
• Slight control over price

Answer 24

Monopolistic Competition

Question 25

What types of businesses are Monopolistically Competitive?

Answer 25

Lots! Most markets exist in this model example is clothing industry

Question 26

4 Types of Monopolies

Answer 26

- Natural Monopoly - Government Monopoly - Technological Monopoly - Geographic Monopoly

Question 27

A way to attract customers through style, service or location, but not a lower price.

Answer 27

Nonprice Competition

Question 28

4 Types of Nonprice Competition

Answer 28

- Characteristics of Goods - Location of Sale - Service Level - Advertising Image

Question 29

When it comes to Prices, Perfect Competition have ____ firms have ______

Answer 29

Lower, firms have no control.

Question 30

Market structure with only a few sellers offering similar product

Answer 30

Oligopoly

Question 31

An agreement among members of an oligopoly to set prices and production levels

Answer 31

Collusion

Question 32

An agreement among firms to sell at the same or similar prices.

Answer 32

Price Fixing

Question 33

An association by producers established to coordinate prices and production

Answer 33

Cartels

Question 34

When it comes to Monopolistic Competition, prices have _____, firms have _____

Answer 34

Higher, firms have some control

Question 35

The economic goal of the firm is to ________

Answer 35

Maximize profit

Question 36

Its the anount of firm receives for the sale of its output

Answer 36

Total Revenue

Question 37

The market value of the inputs a firm uses in production

Answer 37

Total Cost

Question 38

The firm's total revenue minus the total cost

Answer 38

Profit

Question 39

It shows the relationship between quantity of inputs used to make a good and quantity of output that good express as: Q = output L = labor K = capital

Answer 39

The Production Function

Question 40

- Atleast one input is fixed and law of diminishing marginal return applies

Answer 40

Short Run

Question 41

- All inputs are variable

Answer 41

Long Run

Question 42

Each additional unit of input (like labor) adds more output than before

Answer 42

Increasing Returns

Question 43

Each additional unit of input still adds output, but less than the previous one

Answer 43

Diminishing Marginal Returns

Question 44

Adding more input reduces total output

Answer 44

Negative Returns

Question 45

What are the Types of Cost

Answer 45

- Fixed Cost - Variable Cost - Total Cost

Question 46

- A long run average cost DECREASES as output increases - Reasons: specialization, bulk buying, better technology

Answer 46

Economies of Scale

Question 47

- Long run average cost INCREASES as output increases - Reasons: coordination problems, management inefficiency

Answer 47

Diseconomies of Scale

Question 48

Various units of goods are

Answer 48

Homogenous

Question 49

This products that are easy to produce

Answer 49

Steep curve of supply

Question 50

Firms can increase their output level without an increase in cost of delay in time frame

Answer 50

Elastic Supply

Question 51

Products that need a long time to produce

Answer 51

Flat curve of supply

Question 52

Producers have difficulty in changing their output level in a given time frame

Answer 52

Inelastic Supply

Question 53

It does not change with the quantity of the output

Answer 53

Fixed Cost

Question 54

Changes with the quantity of the output

Answer 54

Variable Cost