5

Question 1

What is a cartel

Answer 1

Series of firms which operates like monopoly

Question 2

What is collusion

Answer 2

when rival companies cooperate for their mutual benefit. When two or more parties act together to influence production and/or price levels, thus preventing fair competition. Common in an oligopoly / duopoly.

Question 3

What is limit pricing

Answer 3

setting a product or service price at a level just low enough to deter potential market entrants from competing in a market

Question 4

What is predatory pricing

Answer 4

occurs when a firm sells a good or service at a price below cost (or very cheaply) with the intention of forcing rival firms out of business

Question 5

What are merit goods

Answer 5

commodities that the public sector provides free or cheaply because the government wishes to encourage their consumption

Question 6

What are demerit goods

Answer 6

a good or service whose consumption is considered unhealthy, degrading, or otherwise socially undesirable due to the perceived negative effects on the consumers themselves

Question 7

What is consumer surplus

Answer 7

measurement of consumer benefits resulting from market competition. A consumer surplus happens when the price that consumers pay for a product or service is less than the price they’re willing to pay.

the difference between the actual price a consumer paid for a product and the maximum price they were willing to pay

Question 8

What is producer surplus

Answer 8

the difference between the price that companies are willing to sell products for and the prices that they actually get for them