CH 14&15

Question 1

Monopoly

Answer 1

A market where there is only one producer of a good or service, and that good or service has no close substitutes.

Question 2

A perfect monopoly is when

Answer 2

a single firm supplies 100% of a product in a market

Question 3

Monopoly - Barriers to entry

Answer 3

• Scarce resources
• Economies of scale
• Government intervention
• Aggressive tactics

Question 4

Natural monopoly

Answer 4

Market in which a single firm
can produce the entire
quantity of output demanded
at a lower cost than multiple
firms

Question 5

Marginal Revenue =

Answer 5

(change in) TR / (change in) Q

Question 6

Monopolist must take into
account two effects on
revenue:

Answer 6

1. Quantity effect
2. Price effect

Question 7

Monopolistic competition

Answer 7

Market with many firms that sell goods and services that are similar, but slightly different

Question 8

Product differentiation

Answer 8

The creation of products that are similar to competitors products but more attractive in some ways

Question 9

Product differentiation

Answer 9

The creation of products that are similar to competitors’ products but more attractive in some ways

Question 10

Oligopoly

Answer 10

A market with only a few firms, which sell a similar good or service

Question 11

Collusion

Answer 11

The act of firms working together to make decisions about price and quantity

Question 12

Cartel

Answer 12

A number of firms that collude to make collective production decisions
about quantities or prices