Economics Lesson 10: Market Structures

A market failure where one party knows more than the other about a good or service, leading to a skewed market outcome.

A situation where one party in a transaction has more information about a good or service than another party.

A situation where one party's behavior changes after a contract is agreed upon because they are not entirely accountable.

A conflict of interest that arises when one party (the agent) acts on behalf of another party (the principal).

A classic example of hidden information and adverse selection. Sellers often know more about the car's quality than buyers.

An example where adverse selection is common, as buyers often know more about their health than insurers.

When one party in a transaction has more information than the other, often leading to market inefficiencies.

When a free market leads to an inefficient allocation of resources

Actions taken by businesses that limit competition and prevent other companies from entering the market.

Government regulations designed to promote fair competition and prevent monopolies.

The unintended consequence of one person's actions on the well-being of others.

An action that harms others without their consent.

An action that benefits others without their direct payment.

Goods or services that are non-excludable (everyone can access them) and non-rivalrous (one person's use doesn't diminish another's).

Someone who benefits from a public good without contributing to its cost.

The ability of an individual to own and exercise control over a scarce resource.

Individuals benefit from a good or service without paying for it, leading to under-provision of the good.

Overuse and depletion of a shared resource due to lack of individual responsibility.

One party knows more about the quality or characteristics of a good they are selling.

The part of the oil industry that handles activities after crude oil extraction, including importing, refining, marketing, and selling petroleum products.

Refined products derived from crude oil, such as gasoline, kerosene, and liquefied petroleum gas (LPG).

To bring goods into a country from another country.

To send goods out of a country to another country.

The process of converting crude oil into usable petroleum products.

Selling a product below the average variable cost to drive out competitors or prevent new ones from entering the market.

Costs that change based on the amount of goods produced, like raw materials.

The total variable cost divided by the number of units produced.

A government agency established in 2015 by the Philippine Competition Act (R.A. 10667) to promote fair competition and prevent monopolies in the Philippines.

Agreements between companies that aim to restrict competition and harm consumers, such as price fixing, market sharing, bid rigging, and limiting production.

An illegal agreement between companies to set prices for goods or services at a specific level, usually higher than they would be in a competitive market.

An agreement between companies to divide a market among themselves, so each company has control over a specific territory or customer segment.

A scheme where companies collude to influence the outcome of bids or tenders, ensuring that one particular company wins.

An agreement between companies to reduce their output or production levels, which can lead to higher prices for consumers.

While monopolistic competition might not be inherently bad, some regulation might be necessary to protect consumers from deceptive advertising or misinformation.

Government increases spending or reduces taxes to stimulate economic growth.

Government decreases spending or increases taxes to control inflation.

The Fed buys or sells government securities to influence the money supply.

The Fed adjusts interest rates to influence borrowing and spending.

The Fed sets the minimum amount of funds banks must hold in reserve.

Government intervention can stimulate demand and economic activity, especially in the short run.

Supply creates its own demand, meaning long-term economic growth is driven by production.

The total value of all goods and services produced within a country in a specific period.

Increase in the production of goods and services adjusted for inflation.

Low and predictable inflation, indicating a healthy economy.