Prep 4 Exam Flashcards
1
Q
What is monopoly power?
A
Monopoly power occurs when a firm has dominance in an industry, they can use their dominance in a market to force consumers to purchase at higher prices as they are the sole supplier..
2
Q
What is government intervention?
A
When the government gets involved in markets to correct market failure and improve economic efficiency.
3
Q
What is a demerit good?
A
A demerit good is a good that has negative externalities in consumption.
4
Q
What is an indirect tax?
A
An indirect tax is a tax on a good or service imposed on suppliers aimed to reduce supply.
