Models of Competition

What is a model of competition?

• A description of the type of market that a business operates in

• A type of market structure

• A way to attract customers through style, service or location

• A market dominated by a single seller

What is another term for models of competition?

• Market Structure

• Perfect Competition

• Monopoly

• Oligopoly

Which type of market structure has a large number of firms producing the same product?

• Perfect Competition

• Monopoly

• Monopolistic Competition

• Oligopoly

What is the main factor that differentiates firms in a perfectly competitive market?

• Price

• Quality

• Location

• Service

What are the four conditions for perfect competition?

• Many buyers and sellers, identical products, informed buyers and sellers, free market entry and exit

• Few buyers and sellers, differentiated products, uninformed buyers and sellers, restricted market entry and exit

• Many buyers and sellers, differentiated products, informed buyers and sellers, restricted market entry and exit

• Few buyers and sellers, identical products, uninformed buyers and sellers, free market entry and exit

Which type of business is an example of perfect competition?

• Farmers Markets

• Software Companies

• Pharmaceutical Companies

• Major League Baseball

What are the barriers to entry in a market?

• Factors that make it difficult for new firms to enter a market

• Expenses that a new business must pay before the first product reaches the customer

• A high degree of technological know-how required in certain markets

• Licenses that give inventors the exclusive right to sell their product for a certain period of time

What is a monopoly?

• A market dominated by a single seller

• A market structure with many companies selling similar, but not identical products

• A market structure in which a large number of firms produce the same product

• A market structure with a few large firms dominating the market

Why do monopolies charge high prices?

• Because barriers prevent competitors from entering the market

• Because they have a monopoly power

• Because they take advantage of their market dominance

• All of the above

Which of the following is an example of a natural monopoly?

• Monroe County Water Authority

• AT&T (Bell Telephone)

• Microsoft

• Soft Drink Companies