Chapter 7

What is "Bigger is Better" related to?

• economies of scale

• natural monopoly

• patents

• franchise

If you are making cookies, how does economies of scale apply?

• it is cheaper to bake cookies in larger amounts, rather than one at a time

• it is better to bake one cookie at a time so they taste better

• it is cheaper to bake cookies one at a time, this decreases the cost

How do prices and output in a monopoly compare to a perfectly competitive market?

• lower output, higher prices

• lower output, lower prices

• higher output, lower prices

• higher output, higher prices

How do prices and output in a monopolistic competition market compare to other markets?

• output is between monopoly and perfect competition markets, prices are higher than perfect competition and lower than a monopoly

• output is lower monopoly and perfect competition markets, prices are higher than perfect competition and lower than a monopoly

• output is between monopoly and perfect competition markets, prices are lower than perfect competition and higher than a monopoly

• output is between monopoly and perfect competition markets, prices are lower than perfect competition and higher than a monopoly

Which market has the lowest sustainable prices possible?

• monopoly

• perfectly competitive market

• imperfect competitive market

• monopolistic competitive market

What is the simplest market structure?

• free market

• natural monopoly

• monopoly

• perfect competition

large number of firms all producing essentially the same thing

• free market

• perfect competition

• natural monopoly

• monopoly

What does pure competition assume?

• market is in equilibrium and that all firms sell the same product for the same price

• there is a higher demand for a product than is available

• some companies will be willing to sell goods for lower prices

• there is a scarcity of goods

What are the four conditions for perfect competition?

• many buyers and sellers participate, sellers offer identical products, buyers and sellers are well informed about products, sellers are able to enter and exit the market freely

• few buyers and sellers participate, sellers offer identical products, buyers and sellers are well informed about products, sellers are able to enter and exit the market freely

• many buyers and sellers participate, sellers offer identical products, only buyers are well informed about products, sellers are able to enter and exit the market freely

• many buyers and sellers participate, sellers offer identical products, buyers and sellers are well informed about products, buyers are able to enter and exit the market freely

What is a price war?

• when businesses make so much of a product that they have to sell it for really cheap

• when competitors keep their prices really high

• when competitors cut their prices very low to win business

• when businesses put a lot of signs on billboards to gain business