Economics Unit 3

Competition:

• The effort of each supplier to be the one who meets the demand of as many consumers as possible.

• When one corporation dominates an entire sector of a market

• Only exists in a Centrally Planned Economy

• Is determined by the corporation with the most market power

There are strict conditions for a market to be considered Pure Competition, check all of the of the descriptions that apply

• Multiple buyers, only 1 seller

• Sellers offer identical goods

• Nobody knows anything about the product price or condition

• Sellers and buyers are able to enter and exit the market easily

A market that runs most efficiently when one large firm provides all of the output, for example an electrical company.

• Natural Monopoly

• Unnatural Monopoly

• Supernatural Monopoly

• Cartel

When the government steps in to create barriers that limit the ability of another company to enter a market. For example by granting a patent on a product or a license for a radio station.

• Libertarian Monopoly

• COMMUNISM!

• Government Monopoly

• Oligopoly

Dividing consumers into two or more groups and charge different prices to each group is known as

• Price Discrimination

• Price Gouging

• Predatory Pricing

• Price Flip

Market Power is the ability to control prices and the total market output

• True

• False

Markets dominated by one firm or a few large ones tend to have lower prices and higher output than markets with many sellers. Competition is increased.

• True

• False

The combination in one company of two or more stages of production normally operated by separate companies.

• Horizontal Integration

• Diagonal Integration

• Sideways Integration

• Vertical Integration

Answer explanation

When a company joins with another company, usually in order to increase efficiency.

• Split

• Division

• Addition

• Merger

Which Federal body, under the control of the Justice Department, is in charge of approving or disapproving mergers?

• The FTC (Federal Trade Commission)

• SEC (Securities and Exchange Commission)

• The DEA (Dogs and Emus Administration)

• The Coast Guard