Economics Chapter on Market Structures

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Questions and Answers

What is the condition of market equilibrium?

Quantity supplied is greater than quantity demanded.

Quantity supplied equals quantity demanded. (correct)

Price levels are at their maximum.

Quantity demanded is greater than quantity supplied.

Which of the following is characteristic of perfect competition?

There are many buyers and sellers with identical products. (correct)

A single seller controls the market.

Products offered by sellers are differentiated.

High barriers to entry for new firms.

In a monopoly market structure, which characteristic is true?

There are many sellers competing against each other.

There is free entry and exit for all firms.

There is only one seller with no close substitutes. (correct)

Products have many close substitutes.

What is a price ceiling?

A maximum price imposed by the government. Signup and view all the answers

Which of the following markets is an example of oligopoly?

Cement companies and major telecommunications providers. Signup and view all the answers

What is the primary purpose of a government subsidy?

To encourage production of a good or service. Signup and view all the answers

What does collusion refer to in a market context?

Businesses secretly agreeing to limit competition. Signup and view all the answers

Which of the following describes monopolistic competition?

Many sellers offer similar but differentiated products. Signup and view all the answers

Ano ang maaaring mangyari sa isang pamilihan kung ang demand ay mas mataas kaysa sa supply?

Magkakaroon ng shortage Signup and view all the answers

Alin sa mga sumusunod ang hindi isang halimbawa ng monopolyo?

Cement companies Signup and view all the answers

Ano ang pangunahing epekto ng price ceiling sa isang pamilihan?

Pagbabawas ng supply Signup and view all the answers

Saan nagmumula ang monopolistic competition sa pamilihan?

Dahil sa pagkakaiba-iba ng mga produkto Signup and view all the answers

Ano ang layunin ng isang subsidy sa mga producer?

Pag-ibayuhin ang produksyon Signup and view all the answers

Aling kondisyon ang hindi naglalarawan ng perfect competition?

Mataas na entry barriers Signup and view all the answers

Ano ang sanhi ng hoarding sa pamilihan?

Mataas na presyo sa hinaharap Signup and view all the answers

Ano ang layunin ng patent sa isang produkto?

Proteksyunan ang karapatan ng imbentor Signup and view all the answers

Paano nagiging dahilan ang collusion sa pamilihan?

Pagpapataw ng mataas na presyo Signup and view all the answers

Anong pangunahing epekto ng shortage sa pamilihan?

Mataas na presyo ng produkto Signup and view all the answers

Study Notes

Product and Service Pricing

Products and services are priced based on producers' agreements.
Equilibrium is a state where buyers and sellers agree on the price.
Equilibrium price is the agreed-upon price between consumers and producers.
Equilibrium quantity refers to the amount of a product ready for sale.

Market Structures

Monopoly: One producer controls the market, with unique goods or services. (Examples: Meralco, Manila Water).
Monopsony: One consumer controls a market; multiple producers cater to one consumer. (Examples: Government agencies, the military).
Oligopoly: A few producers dominate the market and offer similar goods (Examples: cement, steel).
Perfect Competition: Many producers offer similar goods; no one producer controls the market.

Market Imbalances

Surplus: Supply exceeds demand, prices usually fall.
Shortage: Demand exceeds supply, prices usually increase.
Price Ceiling: To ensure affordability, governments fix maximum prices, impacting supply dynamics.
Subsidy: Government supports producers by providing funds to promote production or lower the cost for consumers.
Collusion: Producers illegally conspire to fix prices or reduce competition.
Hoarding: Stockpiling goods to raise future prices.

Legal Protections

Patent: A license granted by governments to businesses for exclusive rights to a product or process. This encourages innovation and investment.
Copyright: Protects creative works of individuals preventing others from making copies.
Republic Act 7581: Consumer rights law; national price coordination council monitors price ceiling implementation.

Market Structures and Competition

Perfect competition is an idealized market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information.
Imperfect competition occurs when any of these conditions aren't met. Examples would include monopoly, monopsony, oligopoly & monopolistic competition.
Monopolistic competition occurs when there are many producers and sellers, but the products they offer are differentiated in some way (e.g., branding, quality, features).
Complete competition has characteristics including identical products, many producers and buyers, freedom for producers to enter or exit the market.

Market Concepts

Demand: The consumer's willingness to buy based on price.
Supply: The producer's willingness to sell based on pricing.

Consumer Rights

Republic Act 7581: A law that grants specific consumer rights, such as the right to have fair prices.

Government Role

Government regulates market structures to ensure fair competition
Set price ceilings to control prices.
Implement subsidies to lower prices of products that are important to citizens to ensure accessibility.

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Description

This quiz covers key concepts in economics regarding product and service pricing, market structures, and market imbalances. Understand terms like equilibrium price, monopoly, and oligopoly while exploring how supply and demand affect pricing dynamics.