Economics Lesson 10: Market Structures
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Questions and Answers

What is the goal of competition laws and anti-trust laws?

  • To encourage suppliers to collude
  • To favor monopolies in the market
  • To provide rules for healthy competition (correct)
  • To increase prices for consumers

    • Which of the following is an example of a negative externality?

  • Immunization programs
  • Factory emissions causing air pollution (correct)
  • Public transportation improvements
  • Quality education initiatives

    • What happens when the government imposes a road users' tax to address negative externalities?

  • Traffic congestion will likely worsen
  • It decreases the overall cost of driving
  • It incentivizes more pollution from vehicles
  • Vehicle users will consider the tax in their private costs (correct)

    • Why do markets tend to underproduce goods that result in positive externalities?

    <p>Society does not recognize the external benefits involved</p> Signup and view all the answers

    What characterizes public goods?

    <p>They are non-excludable and non-rival</p> Signup and view all the answers

    What is likely to occur when free riders exploit public goods?

    <p>Inefficiencies in the provision of public goods</p> Signup and view all the answers

    Which of the following best describes positive externalities?

    <p>They yield benefits that affect society positively</p> Signup and view all the answers

    Why might suppliers use anticompetitive practices?

    <p>To diminish competition in the market</p> Signup and view all the answers

    What is adverse selection in the context of health insurance?

    <p>When applicants do not disclose all their health issues.</p> Signup and view all the answers

    Which of the following best describes the principal-agent problem?

    <p>When one party has more information than the other.</p> Signup and view all the answers

    In the market for used cars, what is typically true for owners of 'lemons'?

    <p>They are less likely to sell at high prices.</p> Signup and view all the answers

    What behavior does 'moral hazard' typically refer to?

    <p>Agents taking undue risks because they are not monitored.</p> Signup and view all the answers

    Why might buyers of health insurance be more motivated to purchase policies?

    <p>They have complete knowledge of their own health problems.</p> Signup and view all the answers

    What is a potential consequence of adverse selection in health insurance?

    <p>A rise in the average price of health insurance.</p> Signup and view all the answers

    What can be a solution for insurance companies to mitigate adverse selection?

    <p>Providing insurance only to those who can prove good health.</p> Signup and view all the answers

    How can careful buyers of used cars protect themselves in a market with lemons?

    <p>By getting third-party inspections before purchase.</p> Signup and view all the answers

    What defines a free rider in economic terms?

    <p>A person who receives the benefit of a good but avoids paying for it</p> Signup and view all the answers

    What is the tragedy of the commons?

    <p>A scenario where a common resource is overused due to lack of regulation</p> Signup and view all the answers

    How can asymmetric information affect market pricing?

    <p>It enables sellers to justify higher prices based on undisclosed product strengths</p> Signup and view all the answers

    What is an example of a situation that demonstrates asymmetric information?

    <p>A seller knowing more about a used car’s weaknesses than the buyer</p> Signup and view all the answers

    Which of the following best describes property rights?

    <p>The ability of individuals to own and control a scarce resource</p> Signup and view all the answers

    What mechanism can be implemented to reduce moral hazard in insurance?

    <p>Providing incentives for the agent to disclose information</p> Signup and view all the answers

    Which of the following represents hidden characteristics in a transaction?

    <p>The seller has comprehensive product knowledge while the buyer does not</p> Signup and view all the answers

    What is a key result of the tragedy of the commons?

    <p>Overexploitation of common resources</p> Signup and view all the answers

    What does the downstream oil industry primarily deal with?

    <p>Importing, exporting, and marketing petroleum products</p> Signup and view all the answers

    What is considered predatory pricing in the oil industry?

    <p>Pricing below average variable cost to eliminate competition</p> Signup and view all the answers

    Under what condition is pricing below average variable cost not considered predatory pricing?

    <p>When matching a competitor's lower price</p> Signup and view all the answers

    What is the difference between variable costs and fixed costs?

    <p>Variable costs change with the level of output</p> Signup and view all the answers

    Which statement accurately reflects the liberation of the oil industry?

    <p>Entities can lease, own, and operate refineries</p> Signup and view all the answers

    What is the role of average variable cost in pricing considerations?

    <p>It helps determine the minimum price for selling oil products.</p> Signup and view all the answers

    What does the term 'free competition' imply in the context of the downstream oil market?

    <p>Unrestricted market access for all players</p> Signup and view all the answers

    What activities are included in the downstream oil operations?

    <p>Transporting, refining, and marketing of oil products</p> Signup and view all the answers

    What is the primary goal of the Philippine Competition Commission (PCC)?

    <p>To promote competitive markets</p> Signup and view all the answers

    Which of the following is NOT considered an anti-competitive agreement?

    <p>Regular pricing strategies</p> Signup and view all the answers

    Which act is strictly prohibited under the anti-trust safeguards?

    <p>Cartelization</p> Signup and view all the answers

    What is one way that the Department of Energy (DOE) and the DTI promote fair trade?

    <p>Taking measures to prevent cartelization</p> Signup and view all the answers

    Why might monopolistic competition not require strict regulation?

    <p>The presence of many substitutes keeps demand elastic</p> Signup and view all the answers

    What is the aim of the program to encourage the entry of new participants in the industry?

    <p>To promote fair competition</p> Signup and view all the answers

    Which measure can help protect consumers in a monopolistic market?

    <p>Controlling advertising claims</p> Signup and view all the answers

    Which statement best describes cartel behavior?

    <p>It results in fixed prices and limited production</p> Signup and view all the answers

    What is a likely result of expansionary monetary policy?

    <p>An increase in the amount of money in circulation</p> Signup and view all the answers

    How does an increase in taxes generally affect government spending?

    <p>It increases government spending</p> Signup and view all the answers

    What is the relationship between interest rates and the money supply in contractionary policy?

    <p>Higher interest rates lead to a decreased money supply</p> Signup and view all the answers

    According to Keynes' law, in which economic context is it more applicable?

    <p>Short-run economic scenarios</p> Signup and view all the answers

    What does 'GNI' stand for and how is it calculated from GDP?

    <p>Gross National Income, calculated as GDP plus Net Primary Income from abroad</p> Signup and view all the answers

    What does a decrease in aggregate demand typically indicate about the economy?

    <p>Potential economic contraction</p> Signup and view all the answers

    Which component is NOT part of the equation for calculating GDP from the expenditure side?

    <p>Net Primary Income</p> Signup and view all the answers

    What is indicated by a low single-digit unemployment rate?

    <p>Full employment goals achieved</p> Signup and view all the answers

    Which of the following is true regarding 'Open Market Operations'?

    <p>They involve the buying and selling of government securities</p> Signup and view all the answers

    When evaluating trade policies, what effect does a raised tariff typically have?

    <p>Enhanced protection for domestic industries</p> Signup and view all the answers

    Study Notes

    Lesson 10: Market Structures

    • Monopoly and oligopoly are market structures that may exist. They're only regulated if there's public interest abuse.
    • Government ensures fair competition.
    • This involves command-and-control and market-based intervention.
    • Competition benefits consumers and the poor, promoting economic competitiveness.
    • Competition policies and regulations address market power (monopolies, oligopolies, mergers), anti-competitive practices, barriers to entry, liberalization, deregulation, privatization, and consumer protection.
    • The Price Act (RA 7581) protects consumers. It aims to stabilize basic necessities' prices and prevent undue price increases during emergencies.
    • Illegal acts like hoarding, profiteering, and cartels that artificially raise prices are prohibited.
    • The Downstream Oil Industry Deregulation Act (RA 8479) deregulates the downstream oil industry.

    Lesson 11: Basic Theory

    • Economic agents act in the market for self-interest. If rules are followed, society benefits.
    • Market failures occur when actions (production/consumption) benefit society less than possible.
    • Major causes include lack of competition, externalities, free riders, and asymmetric information.
    • Competition benefits society long term.
    • Externalities are spillover effects (positive/negative) of actions on others. Negative externalities harm others (e.g., pollution, congestion). Positive benefit others (e.g., immunizations).

    Lesson 12: (Phil. Survey Development Aspirations - Ambisyon Natin 2040)

    • Filipinos' aspirations center on happiness and well-being.
    • "Ambisyon Natin 2040" is a survey on Filipino aspirations.

    Lesson 13: Basic Macroeconomic Variables

    • Macroeconomic variables involve income/output growth and prices. This relates to how well the overall economy is functioning.
    • Real GDP and GNI growth are indicators of economic growth.

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    Related Documents

    ECON110 PDF - Market Structures & Competition Policy

    Description

    This quiz covers key concepts from Lesson 10 on Market Structures, focusing on monopolies, oligopolies, and their regulation. Learn about government roles in ensuring fair competition and the impact of competition policies on consumers and the economy. Test your knowledge on the Price Act and the Downstream Oil Industry Deregulation Act.

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