Market Structures

Question 1

Perfect Competition

Answer 1

Market structure in which a large number of firms all produce the same product (no single seller controls supply or prices)

Question 2

Commodity

Answer 2

Product that is the same no matter who produces or sells it, such as petroleum, notebook paper, or milk,

Question 3

Barrier to Entry

Answer 3

Any factor that makes it difficult for a new firm to enter a market

Question 4

Imperfect competition

Answer 4

Expenses a new business must pay before it can begin to produce and sell goods

Question 5

Start-Up Costs

Answer 5

Expenses a new business must pay before it can begin to produce and sell goods

Question 6

Monopoly

Answer 6

Market dominate by a single seller

Question 7

Economy of Scale

Answer 7

Factors that cause a producer’s average cost per unit to fall as output rises

Question 8

Natural Monopoly

Answer 8

Market that runs most efficiently when one large firm supplies all of the output

Question 9

Government Monopoly

Answer 9

Monopoly created by the government

Question 10

Patent

Answer 10

License that gives the inventor of a new product the exclusive right to sell it for a certain period of time

Question 11

Franchise

Answer 11

Right to sell a good or service within an exclusive market

Question 12

License

Answer 12

Government issued right to operate a business

Question 13

Price discrimination

Answer 13

Division of customers into groups based on how much they will pay for a good

Question 14

Market power

Answer 14

Ability of a company to change prices and output like a monopolist

Question 15

Monopolistic Competition

Answer 15

Market structure in which many companies sell products that are similar but not identical

Question 16

Differentiation

Answer 16

Making a product different from other similar products

Question 17

Nonprice Competition

Answer 17

Way to attract customers through style, service, or location, but not a lower price

Question 18

Oligopoly

Answer 18

Market structure in which a few large firms dominate a market

Question 19

Price War

Answer 19

Series of competitive price cuts that lowers the market price below the cost of production

Question 20

Collusion

Answer 20

Agreement among firms to divide the market, set prices, or limit production (illegal)

Question 21

Price fixing

Answer 21

Agreement among firms to charge one price for the same good (illegal)

Question 22

Cartel

Answer 22

Formal organization of producers that agree to coordinate prices and production

Question 23

4 Types of Market Structures

Answer 23

Perfect Competition
Monopolies
Monopolistic Competition
Oligopolies

Question 24

Money

Answer 24

Anything that serves as a medium of exchange, a unit of account, and a store of value

Question 25

Medium of Exchange

Answer 25

Anything that is used to determine value during the exchange of goods and services

Question 26

Barter

Answer 26

The direct exchange on one set of goods or services for another

Question 27

Unit of Account

Answer 27

A means for comparing the values of goods and services

Question 28

Store of Value

Answer 28

Something that keeps its value if it is stored rather than used

Question 29

Currency

Answer 29

Coins and paper bills used as money

Question 30

Commodity Money

Answer 30

Objects that have value in themselves and that are also used as money

Question 31

Representative Money

Answer 31

Objects that have value because the holder can exchange them for something else of value

Question 32

Fiat Money

Answer 32

Money that has value because the government has ordered that it is an acceptable means to pay debt

Question 33

Bank

Answer 33

An institution for receiving, keeping, and lending money

Question 34

National Bank

Answer 34

A bank chartered, or licensed, by the national government

Question 35

Bank Run

Answer 35

Widespread panic in which great numbers of people try to redeem their paper money

Question 36

Greenback

Answer 36

Paper currency issued during the Civil War

Question 37

Gold Standard

Answer 37

A momentary system in which paper money and coins are equal to the value of a certain amount of gold

Question 38

Federal Reserve System

Answer 38

The nation's central banking system

Question 39

Central Bank

Answer 39

Bank that can lend to other banks in times of needs

Question 40

Member Bank

Answer 40

Bank that belongs to the Federal Reserve System

Question 41

Federal Reserve Note

Answer 41

The national currency we use today in the United States

Question 42

Great Depression

Answer 42

The severe economic decline that began in 1929 and lasted for more than a decade

Question 43

Federal Deposit Insurance Corporation

Answer 43

The government agency that insures customer deposits if a bank fails

Question 44

Money Supply

Answer 44

All the money available in the United States economy

Question 45

Liquidity

Answer 45

The ability to be used as, or directly converted to, cash

Question 46

Demand Deposit

Answer 46

The money in checking accounts

Question 47

Money Market Mutual Fund

Answer 47

a fund that pools money from small savers to purchase short-term government and corporate securities

Question 48

Fractional Reserve Banking

Answer 48

A banking system that keeps only a fraction of funds on hand and lends out the remainder

Question 49

Default

Answer 49

Failure to pay back a loan

Question 50

Mortgage

Answer 50

A specific type of loan that is used to buy real estate

Question 51

Credit Card

Answer 51

A card entitling its holder to buy goods and services based on holder's promise to pay for these goods and services

Question 52

Interest

Answer 52

The price paid for the use of borrowed money

Question 53

Principal

Answer 53

The amount of money barrowed

Question 54

Debit Card

Answer 54

A card used to withdraw money

Question 55

Creditor

Answer 55

Person or institution to whom money is owed