Market Structures Review Economics Mr. Bordelon

Key Terms _____ is when a monopolist divides consumers into groups and charges different prices for the same good.

Key Terms Price discrimination is when a monopolist divides consumers into groups and charges different prices for the same good.

Key Terms A market with many firms producing the same good is in _____.

Key Terms A market with many firms producing the same good is in perfect competition.

Key Terms Economists define _____ as a market structure with a few large firms, each of which has some market power.

Key Terms Economists define oligopoly as a market structure with a few large firms, each of which has some market power.

Key Terms _____ are products that are identical no matter who produces them.

Key Terms Commodities are products that are identical no matter who produces them.

Key Terms A(n) _____ grants the right to sell an invention without competition.

Key Terms A patent grants the right to sell an invention without competition.

Key Terms A(n) _____ may exist in market where it is most efficient for only one large firm to provide a product.

Key Terms A natural monopoly may exist in market where it is most efficient for only one large firm to provide a product.

Key Terms Economists use the term _____ to describe agreements among firms to set prices and production levels.

Key Terms Economists use the term collusion to describe agreements among firms to set prices and production levels.

Key Terms Monopolies benefit from _____, where production costs go down with each additional unit produced, and in turn, profits increase.

Key Terms Monopolies benefit from economies of scale, where production costs go down with each additional unit produced, and in turn, profits increase.

Key Terms _____ is an agreement among firms to charge one price for the same good.

Key Terms Price fixing is an agreement among firms to charge one price for the same good.

Main Ideas Compare and contract natural monopolies and government monopolies.

Main Ideas Compare and contract natural monopolies and government monopolies. Natural monopolies exist in markets where it would be inefficient for more than one producer to exist. Government monopolies provide franchises, licenses, patents or copyrights for specific purposes. Both allow monopolies to exist.

Main Ideas What four conditions are necessary for a market to be considered monopolistically competitive?

Main Ideas What four conditions are necessary for a market to be considered monopolistically competitive? Many firms Relatively easy market entry (few barriers) Similar, but differentiated products Slight control over price Know the conditions for all four market structures.

Monopolistic Competition Main Ideas Perfect Competition Monopoly Oligopoly Monopolistic Competition Number of producers Many One Few/Handful Variety of goods Identical (commodity) Unique good (inelastic) Some (commodities with some differences usually) Some (product differentiation) Market entry None/few Impossible Difficult Easy Control over price None Complete Some (incentives to cooperate and cheat) Some (slight) Example Agriculture Utilities Oil Gas Stations

Main Ideas How do monopolies control price?

Main Ideas How do monopolies control price? Monopolies control price by manipulating production.

Main Ideas How do companies conduct non-price competition?

Main Ideas How do companies conduct non-price competition? physical characteristics location customer service advertising

Main Ideas What is required for a firm to conduct a successful price discrimination scheme?

Main Ideas What is required for a firm to conduct a successful price discrimination scheme? Market power Distinct groups Difficult resale