Economics Chapter 7 Market Structures

[Pages:3]Economics Chapter 7

Market Structures

I. Market Structures: _____________________________________________________________ depends upon:

? N________________________________-- helps determine the level of competition more

producers = more competition

? S_________________________________? degree to which producers in a market are similar.

The more similar, the greater the competition

? E_________________________________ -- markets that are easy to enter are the most

competitive

? C__________________________________-- ability to influence prices = market power the

more competitive the market the less market power individual businesses have

? Nobody Sleeps in Economics Class!!!

Perfect Competition

Monopolistic Competition

Oligopoly

Monopoly

____________ producers and consumers

_________________ products

_____________entry into market

No control over _____________ Prices determined by ________________________

Consumers have easy access to ___________________ about products and prices

Producers are forced to be _________________

Consumers pay _______________________ ________________

_________ producers provide ____________ but varied goods

__________ competition

Non- competition ? _______________

Markets remain ____________

Examples:

__________ number of producers provide ____________ but not identical goods

Producers have ______ control over _________

Industry dominated by a _______ firms producing similar products __________ producers have advantage over smaller producers -____________ of scale

___________? producers make agreements on ____________ levels and pricing ____________? set production levels and prices for specific products OPEC (oil)

Examples:

Market in which a ______________provides _________________

Significant control over________ Less incentive to ___________ customers _________________ to entering the market ________________ Laws stop Monopolies

Most Monopolies are ________

Types of Monopolies: _____________ monopolies ? one producer controls a natural resource ________________ created ? protect inventors of products ? copyrights/patents, __________ Park Service, licenses __________monopolies -- single firm provides good or service more __________and at a lower cost ? utility companies, cable

Economics Chapter 7

Market Structures

The further __________ on the scale, the greater degree of _______________________ exercised by the firm

II. Economies of scale: greater efficiency and cost savings that result from _______________________ Usually associated with _______________________________ Examples:

III. Anit-Trust Laws: ? United States antitrust law prohibits anti-competitive behavior ? __________________ ? ________________________________in the marketplace ? Make ___________________certain practices deemed to hurt businesses or consumers or both ? ___________________________________ ? limits cartels and monopolies ? response to John D Rockefeller's Standard Oil monopoly

Economics Chapter 7

Market Structures

IV. Market Failures:

Market failures occur when markets do not allocate ____________ and ________________ ________________________.

1. 2. 3. are all examples of Market Failure

V. Externalities and Public Goods Also examples of market failure

Externalities ? things that affect someone other than _____________ or _______________; spillover effects, either ___________ or _____________, resulting from the actions of companies or individuals

Examples: ? factory dumps ____________________ into a river, people downstream get sick ? neighbor plants a new flower garden, results are pleasing to you

Public Goods ? good available for _____________ ? regardless of ____________________ (opposite of private goods) goods and services that are not provided by the market system because of the difficulty of getting people who use them to __________for their use.

Examples: ? Streetlights and _____________ ? fire and police services, __________________________, public parks

Private firms do not provide us with these public goods because they have no way to make the people who benefit from them pay for them.

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