Monopoly, Oligopoly, Pure Competition

Why does the U.S. government enforce antitrust laws?

• to ensure the development of public goods and services

• to create incentives for research and development

• to develop large-scale efficient industries

• to ensure competition in the marketplace

Patents are a form of monopoly that society allows because they

• encourage firms to develop new products that benefit society.

• maintain an orderly way for companies to make lots of money.

• give companies the right to decide who uses their products.

• situation in which a few manufacturers control an industry.

Which scenario is an example of a natural monopoly?

• a local water company is the sole provider of water for a small town

• a farmer produced green beans for a sale at a farmer’s market

• a dry cleaner specializes in environmentally friendly cleaning methods

• a small number of cereal companies produce most of the cereal on the market

Which business is an example of vertical integration?

• a clothing store that sells men and women’s clothing

• a company that makes lightbulbs and heavy machinery

• an internet provider that purchases a television network

• an oil company that purchases gas stations

Which market structure is BEST indicated by the soda market, controlled by Pepsi and Coke?

• monopoly

• oligopoly

• pure competition

• natural monopoly

What is a difference between how prices are determined in a monopoly and an oligopoly?

• Limited competition determines prices in a monopoly, while supply and demand determine prices in an oligopoly.

• A single business determines prices in a monopoly, while limited competition determines prices in an oligopoly.

• Supply and demand determine prices in a monopoly, while the government determines prices in an oligopoly.

• The government determines prices in a monopoly, while a single business determines prices in an oligopoly.

Why would the U.S. government seek to limit the development of business monopolies?

• to guarantee low prices

• to increase production levels

• to encourage competition

• to improve hiring practices

Several grocery store chains secretly agree to charge consumers the same price for milk and other dairy products. Which of these BEST describes an effect of this type of activity?

• it hurts monopolies

• it hurts market competition

• it helps consumers afford goods

• it helps create new business methods

Today there are several different operating systems for personal computers. Every computer needs a single operating system. Selecting the best system can be difficult, since each has a different set of strengths and weaknesses. Which type of market is associated with these characteristics?

• Monopoly

• Oligopoly

• Pure competition

• Monopolistic Competition

Use the list below to answer the question.

- The market is dominated by a few large firms. - Companies sell identical goods. - Producers face high barriers to enter the industry.

Which type of market structure is described by this list?

• monopoly

• pure competition

• oligopoly

• monopolistic competition