ScienceEconomicsEconomics: Chapter 7 Study Guide
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Economics: Chapter 7 Study Guide

Quartney Griffin avatar Quartney Griffin
29 June 2023
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Commodity
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Product that is considered the same no matter who produces or sells it
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Price Discrimination
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Grouping consumers based on how much they will pay for a good
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Economies For Sale
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Factors that cause a producer's average cost per unit to fall as output rises
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Predatory Pricing
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Selling a product below cost for a short period of time to drive competitors out of the market.
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Merger
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When two or more companies join to form a single firm
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Barrier To Entry
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Factor that makes it difficult for a new firm to enter the market
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Deregulation
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Removal of some government controls over a market
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Antitrust Laws
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Laws that encourage competition in the marketplace
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Start Up Costs
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Expenses that new businesses must pay before they can begin to produce and sell goods and services
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Patent
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License that gives the inventor of a new product the exclusive right to sell it for a specific period of time
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Oligopoly
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Market structure in which a few large firms dominate a market
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Collusion
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Illegal agreement among firms to divide the market, set prices, or limit production
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Monopolistic Competition
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Market structure in which companies sell products that are similar but not identical
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Why does a perfectly competitive market require many participants as both buyers and sellers?
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So no individual can control the price.
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What is the relationship between start up costs and a competitive market?
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High start up costs are likely to make a market less competitive.
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How does a perfect market influence output?
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Each firm adjusts its output so that it's costs, including profit, are covered.
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Why does a perfectly competitive market require buyers and sellers?
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So no individual can control the price.
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Milk is considered a commodity because it is which of the following?
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The same product regardless of who sells it.
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How are start up costs and market competition related?
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High costs reduce competition.
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Why is perfect competition among businesses rare?
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Barriers of entry.
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How does perfect competition influence output at different firms?
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A government's purpose in giving an antitrust exemption to sorts leagues is to do what?
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Prevent other leagues from fnancing competing sports.
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A discounted airline fare is a price discrimination that can be offered because of what?
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Vacationers are willing to put up with the restriction that airlines impose.
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Patents are a firm of monopoly that society allows because they what?
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Encourage firms to research and develop new products that benefit society as a whole.
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The controller of a monopoly sets the price of goods by charging what?
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The price at which profit is maximized.
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Why does the government give copyrights to artists?
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To give artists control of their work.
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Why is a discounted airline ticket a form of price discrimination?
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Only some travelers get discounts.
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Why does the government grant patents?
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To protect and encourage inventions.
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Which one of these businesses has the advantage of economies of scale?
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If two shops sell the same merchandize but one offers a higher level of service, the service distinction is what?
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Nonprice competition.
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A major characteristic of monopolistic competition is that prices will be what?
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Lower than in perfect competition.
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A cartel is able to survive only if what happens?
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All members keeps to the agreed output levels.
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The main difference between monopolistic competition and perfect competition is what?
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In monopolistic competition sellers can profit from the differences between their products and other products.
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Which is true of prices on monopolistic competition?
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Building a video store near a grocery store is an example of which tripe of nonprice competition?
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What is one condition needed for a cartel to survive?
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How is monopolistic competition mainly different from perfect competition?
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The U.S. government's deregulation of the airline industry caused prices to decline in many places. Why?
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The government claimed that, to illegally extend its control over the market, Microsoft had used what?
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Predatory pricing and requiring customers to buy other products.
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Before government approves a merger, companies must prove that the merger would do what?
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That the merger will benefit the consumer.
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Inventions such as cellular phones can affect the government's antitrust policies because of what?
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They can mean that the need for regulation no longer exists.
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What is one effect of deregulation of cable television?
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Higher prices for cable.
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What can the government do to keep monopolies from being formed?
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Block mergers.
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Before approving a merger, what does the government try to predict?
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How the never will benefit the consumers.
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How has deregulation helped consumers in some industries?
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By lowering prices.
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What is the intent if both deregulation and antitrust laws?
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To increase competition.
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Why are there relatively few markets in which there is perfect competition?
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Barriers of entry.