Market Structures and Competition Flashcards
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Questions and Answers

Which best describes the availability of substitutes in a monopoly?

  • There are many substitutes.
  • Substitutes are not relevant.
  • There are a few substitutes.
  • There are no substitutes. (correct)
  • Wellness Pharmaceuticals has released a new antidepressant, Lexabuzac. Which type of monopoly does the company most likely have on this medication?

  • Geographic monopoly
  • Technological monopoly (correct)
  • Natural monopoly
  • Market monopoly
  • The market for which item generally involves pure competition?

  • Soybeans
  • Wheat
  • Oil
  • Corn (correct)
  • Which best describes how the government enables government monopolies to exist?

    <p>By creating and running a monopoly</p> Signup and view all the answers

    Who sets the price in a monopolistic competition?

    <p>Producers and consumers</p> Signup and view all the answers

    The lack of competition within a monopoly means that

    <p>Monopolists set their own prices.</p> Signup and view all the answers

    Why is competition limited in an oligopoly?

    <p>High entry costs prevent new producers from entering the market.</p> Signup and view all the answers

    Which is an example of a government monopoly in the United States?

    <p>The US Postal Service</p> Signup and view all the answers

    ______________ is the term used to describe the amount of control or influence that consumers have on a market.

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

    Why is the automobile industry considered an oligopoly?

    <p>It is dominated by a few key players.</p> Signup and view all the answers

    When an oligopoly exists, how many producers dominate the market?

    <p>a few</p> Signup and view all the answers

    ____________ is the type of competition that occurs in a competitive market without identical producers.

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

    In pure competition, producers compete exclusively on the basis of

    <p>sell identical items</p> Signup and view all the answers

    Natural monopolies occur when one producer

    <p>can meet the market's entire demand</p> Signup and view all the answers

    In the United States, which type of industry is often considered part of an oligopoly?

    <p>Cell phone carriers</p> Signup and view all the answers

    Which best describes how the government sanctions technological monopolies?

    <p>By issuing patents for the technology</p> Signup and view all the answers

    Study Notes

    Market Structures Overview

    • A monopoly is characterized by the absence of substitutes for the product offered.
    • Technological monopolies arise when a company possesses unique advancements, exemplified by Wellness Pharmaceuticals and its antidepressant Lexabuzac.

    Competition Types

    • Pure competition typically occurs in markets dealing with homogeneous goods, such as corn.
    • Monopolistic competition involves numerous producers who influence prices collaboratively.

    Government and Monopolies

    • Governments may create and operate monopolies, ensuring exclusivity in certain services, like the US Postal Service.
    • Technological monopolies receive government support in the form of patents, granting the innovator exclusive rights to the technology.

    Oligopoly Dynamics

    • Oligopolies feature limited competition due to high market entry costs, which deter new entrants.
    • The automobile industry exemplifies an oligopoly because of substantial barriers to entry, brand loyalty significance, and dominance by a few key players.

    Market Control

    • In monopolistic markets, monopolists have the power to set prices due to the lack of competition.
    • A general term for consumer influence over market conditions is "sovereignty."
    • In markets characterized by oligopoly, a few producers typically dominate.

    Types of Competition

    • Monopolistic competition exists among non-identical producers, allowing for product differentiation.
    • In pure competition, producers compete solely based on selling identical goods.

    Natural Monopolies

    • Natural monopolies emerge when a single producer can satisfy the entire market demand efficiently, reducing redundancy in supply.

    Oligopoly Examples

    • Cell phone carriers in the United States are frequently cited as examples of industries operating under oligopoly conditions.

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    Test your understanding of market structures and competition with these flashcards. Each card presents key concepts related to monopolies, competition types, and market characteristics. Perfect for students looking to reinforce their knowledge in economics.

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