1. What is it called when a few major firms dominate a particular market? an oligopoly

2. What is it called when an oligopoly colludes to set prices & ruin competition? a cartel

3. What is it called when a monopolist charges different prices to different consumers? Examples? price discrimination kids stay free, discount for early purchase, etc.

4. What is a “price war”? when members of an oligopoly stop colluding and try to undersell each other with increasingly lower prices

5. What are two conditions that must be present for a monopoly to exist? single seller, no substitutes, difficult market entry

6. Name two different types of monopoly? natural, geographic, technological, and government

7. What type of monopoly occurs when competition would drive prices below per unit production costs? Natural monopoly

8. Identify two factors that place price pressure on monopolies. consumer demand, potential competition, & gov’t regulation

9. How does deregulation effect companies? It decreases the amount of government restrictions on the business.

10. Selling a product below cost to drive competitors out of the market is: Predatory Pricing

11. What are four Conditions of Monopolistic Competition? Many firms, few artificial barriers to entry, slight control over price, differentiated products

12. What is the name for a situation in which many buyers and sellers compete under the laws of supply and demand? perfect competition

13. What is the opposite of perfect competition? monopolistic competition

14. What is product differentiation? monopolies using small differences and marketing campaigns to set their products apart

15. What is the name for the practice of competition based on brand identity rather than price? non-price competition

16. Give an example of economies of scale. Hydroelectric plant and telephone service- high start up cost, cost per unit decreases as output rises.

17. What is the primary purpose of anti-trust legislation? eliminate imperfect competition

18. What are two of the main benefits of a sole proprietorship?  ease of start up, full personal control, exclusive right to the profits

19. What are the three basic functions of money?  Medium of exchange, standard of value, store of value

20. Name 3 of the necessary characteristics of money.  Durability, portability, divisibility, stability of value, and acceptability

21. What is representative money?  When the money actually represents a valuable commodity

22. What is fiat money? Name a major country that uses this form.  When money has value b/c of government decree, the U.S.

23. What are the three components of Bonds?  Coupon rate, maturity, par value

24. What are low risk ways to invest money?  Money market account, CD’s, savings bonds, savings accounts

25. What is the strategy that spreads out investments to reduce risk?  Diversification

26. What U.S. president dismantled the first national bank?  Andrew Jackson

27. Which period of U.S. history has been marked by reform and regulation in the Banking industry?  The last 90 years

28. Name two New Deal banking reforms.  FDIC, can’t sell securities, can’t redeem dollars for gold, margin & reserve limits

29. What was the S & L crisis of the late 1980’s?  Many S & L’s went under because of bad loans & help from Congress that loosened their regulations

30. What major change in Federal banking was caused by the Panic of 1907?  The Federal Reserve System (FED)

31. How many FED district banks are there? Who do they supervise?  12, the member banks in their respective regions

32. What is the primary influence the FED has over the economy?  They can regulate the money supply