1. Bell Work
What do you think you might need in order to have “perfectly competitive” markets? What role would buyers have? What role would sellers have?

2. In Lak’ech by Luis Valdez
Tu eres me otro yo Si te hago daño a ti, Me hago daño a mi mismo Si te amo y respeto Me amo y respeto yo
You are my other me If I do harm to you, I do harm to myself If I love and respect you I love and respect myself

3. Bell Work
What do you think you might need in order to have “perfectly competitive” markets? What role would buyers have? What role would sellers have?

4. Quiz Statistics 2 3 4 5 6 Total A 9 7 32 B 8 13 10 45 C 1 23 D 26 F 1129
Avg
76.3
77.1
78.1
70.5 70
74.4

5. Which of these is a major problem in the execution of a rationing system?
market spikes
price flexibility
price neutrality
administrative expense

6. Which of these describes the process of an item finding its economic equilibrium?
decree
fluctuation
direction
expectation

7. Which of these describes the effects of price floors on the U. S
Which of these describes the effects of price floors on the U.S. sugar industry?
They helped sugar farmers while increasing the price of sugar for the consumer.
They helped sugar farmers while decreasing the price of sugar for the consumer.
They harmed sugar farmers while increasing the price of sugar for the consumer.
They harmed sugar farmers while decreasing the price of sugar for the consumer.

8. Who among the following benefits the most from rent control?
people with children and pets
tenants in rent-controlled apartments
owners of rent-controlled apartments
people who perform maintenance and repairs on buildings

9. What is one way the government ensures that farmers receive a target price for their goods?
by granting them nonrecourse loans
by establishing and maintaining price ceilings
by purchasing and distributing their crops at market prices
by forcing certain farm goods to maintain an equilibrium price

10. Market Structures
How do varying market structures impact prices in a market economy?
Why do markets fail?
How does the government attempt to correct market failures?

11. Pure Competition
Pure competition is a theoretical market structure that has a very large numbers of sellers, identical products, and freedom to enter into, conduct, and get out of a business.
Perfect competition is pure competition in which all buyers and sellers have perfect knowledge of all market conditions.
Under pure competition, market supply and demand set the equilibrium price for a product.
The profit-maximizing quantity of output is the point at which the marginal cost of production equals the marginal revenue from sales (MC = MR).
Pure competition is important because economists use it as a yardstick to measure other market structures such as monopolistic competition, oligopoly, and monopoly.

12. Monopolistic Competition
Monopolistic competition has all of the features of pure competition except that the products are similar, but not identical.
Monopolistic competitors rely on non-price competition and product differentiation to make their products stand out.
Monopolistic competitors expand production until marginal cost equals marginal revenue (MC = MR).

13. Crash Course: Markets
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14. Reflection
Have you ever decided to not purchase something from a company because you disagreed with the way they conducted business (worker treatment, suppliers, etc.)? What was the deciding factor?

15. What is a monopoly? How do you play the game of Monopoly?
Bell Work
What is a monopoly? How do you play the game of Monopoly?

16. In Lak’ech by Luis Valdez
Tu eres me otro yo Si te hago daño a ti, Me hago daño a mi mismo Si te amo y respeto Me amo y respeto yo
You are my other me If I do harm to you, I do harm to myself If I love and respect you I love and respect myself

17. What is a monopoly? How do you play the game of Monopoly?
Bell Work
What is a monopoly? How do you play the game of Monopoly?

18. In an oligopoly, very few sellers dominate the industry.
Oligopolists tend to act together—if one company reduces prices or offers a promotion, others in the industry match the price or promotion almost immediately to avoid losing customers.
Oligopolists compete on a non-price basis by introducing new or different features.
Collusion is an illegal agreement among oligopolists to fix prices or otherwise behave in a cooperative manner for their own benefit.
Like all other market structures, oligopolists maximize their profits when marginal cost equals marginal revenue (MC = MR).

19. Monopolies
Monopoly is the opposite of pure competition; it is a market structure that has only one seller of a particular product.
A natural monopoly is one in which a single firm can produce the product more cheaply than several competing firms could.
A geographic monopoly is a monopoly based on the absence of other sellers in a certain geographic area.
A technological monopoly is one based on ownership or control of a manufacturing method, process, or other scientific method.
A government monopoly is a monopoly owned and operated by the government.
Monopolies equate marginal cost with marginal revenue to find the profit-maximizing quantity of output.

20. Crash Course: Monopoly
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21. What did you think of the game with the new rules? Why?
Reflection
What did you think of the game with the new rules? Why?

22. What is pure competition. A
What is pure competition? A.A theoretical market structure with very large numbers and identical products B.A theoretical market structure with identical products, and freedom of entry and exit C.A theoretical market structure with identical products, very large numbers, and freedom of entry and exit D.A theoretical market structure with very large numbers, identical products, freedom of entry and exit, and perfect knowledge by all buyers and sellers of market conditions

23. The term market structure refers to A
The term market structure refers to A.the theoretical characteristics of firms in the same industry. B.the theoretical characteristics of firms in different industries. C.the profit-maximizing behavior of firms that use marginal analysis. D.the nature and degree of competition among firms in the same industry.

24. What is industry. A. It is the demand side of the market. B
What is industry? A.It is the demand side of the market. B.It is the theoretical side of the market. C.It is the supply side of the market. D.It is the competitive side of the market.

25. Why is pure competition important. A
Why is pure competition important? A.Economists use it to evaluate less- competitive market structures. B.Economists use it to evaluate the three conditions for competition. C.Economists use it to evaluate more- competitive market structures. D.Economists use it to evaluate perfect competition.

26. How do monopolistic competitors try to make their products stand out? A.They lower their prices. B.They use nonprice competition such as advertising. C.They raise their prices. D.They maximize profits.

27. How does the profit-maximizing behavior of a monopolistic competitor compare to that of perfect competitors, oligopolies, and monopolies? A.They all try to find the level of output where their marginal cost is equal to their marginal revenue. B.The monopolistic competitor is similar to monopoly but not to pure competition. C.The monopolistic competitor is similar to pure competition but not to oligopoly. D.The monopolistic competitor is similar to monopoly but not to oligopoly.

28. What is oligopoly? A.It is a market structure in which products are always similar. B.It is a market structure in which a very few large sellers dominate the industry. C.It is a market structure in which one seller controls the industry. D.It is a market structure in which prices are similar between sellers.

29. Name one form of collusion. A. Profit maximization B. Profit sharing C
Name one form of collusion. A.Profit maximization B.Profit sharing C.Price fixing D.Non-price competition

30. What type of monopoly is based on ownership of a manufacturing method or other scientific process? A.Geographic monopoly B.Natural monopoly C.Government monopoly D.Technological monopoly

31. How do monopolies maximize profits. A
How do monopolies maximize profits? A.They equate marginal cost with marginal revenue. B.They keep marginal revenue above marginal cost. C.They keep marginal cost above marginal revenue. D.They control marginal costs and marginal revenue.

32. Market Failures
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33. The five main causes of market failures are: Not enough competition
Types of Market Failures
A market fails when any of the requirements for a competitive market ceases to exist.
The five main causes of market failures are:
Not enough competition
Not enough information
Resources that cannot, or will not, move
Too few public goods
Externalities or spillovers

34. Public Goods
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35. The government sometimes subsidizes positive spillovers.
Dealing with Spillovers
Spillovers distort the decisions made by consumers and producers, making the economy less efficient.
The government often attempts to control harmful spillovers by making them illegal, setting standards for them, or taxing them.
The government sometimes subsidizes positive spillovers.
Cost-benefit analysis can be used to evaluate the costs and benefits of several competing projects.
Government involvement is necessary to deal with both positive and negative spillovers.

36. Externalities
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37. When would a market failure occur. A
When would a market failure occur? A.When a market is too small for the population of consumers B.When any of the requirements for a competitive market are lacking C.When a market is too large for the population of consumers D.When a market has too many perfect competitors

38. Having too few public goods is evidence of A. a market failure. B
Having too few public goods is evidence of A.a market failure. B.too many spillover effects. C.too few externalities. D.too much laissez-faire.

39. A decrease in _______ tends to reduce the efficient use of ______ resources. A.information; plentiful B.competition; plentiful C.public goods; scarce D.competition; scarce

40. What does it mean when resources are immobile. A
What does it mean when resources are immobile? A.This means that land, capital, labor, and entrepreneurs can and will move to markets where they can earn higher returns. B.This means that land, capital, labor, and entrepreneurs do not, or will not, move to markets where they can earn higher returns. C.This means that government cannot buy its goods and services wherever it finds the best prices. D.This means that companies can move markets if they are not making a profit.

41. What is an example of a public good. A. Highways B. Coffee shops C
What is an example of a public good? A.Highways B.Coffee shops C.Gas stations D.Shopping malls

42. Why are spillover effects, or externalities, symptoms of market failures? A.Their costs and benefits are reflected in the market prices that buyers pay. B.Their costs and benefits are not reflected in the market prices that buyers pay. C.Only negative spillover effects are market failures because they harm third parties. D.Only positive spillover effects are market failures because they benefit third parties.

43. What is an example of a way to deal with spillovers. A
What is an example of a way to deal with spillovers? A.Subsidizing harmful spillovers B.Taxing public goods C.Taxing harmful spillovers D.Taxing helpful spillovers

44. Why do state and local governments pay for the cost of primary and secondary public education? A.Primary and secondary education has so many positive spillover effects. B.The federal government refuses to do it. C.Teachers and school administrators are resources that can't or won't move. D.There isn't enough competition from privately owned, for-profit schools.

45. If Project A's ratio of benefits to costs is 1
If Project A's ratio of benefits to costs is 1.5, and Project B's ratio is 4, which project should be funded? A.A B.B C.Both A and B D.Neither A nor B

46. Whenever we want to deal with positive or negative spillovers, involvement from _______ is necessary. A.individual firms B.consumers C.families D.government

47. The Sherman Act of 1890 was the first American law against monopolies.
Ensuring Competition
The government can help maintain competitive markets by breaking up monopolies, expanding laws against them, or regulating their activities.
The Sherman Act of 1890 was the first American law against monopolies.
In 1914, the Clayton Antitrust Act outlawed price discrimination, and the Federal Trade Commission Act set up the Federal Trade Commission to help stop unfair business practices.
Some monopolies, such as public utilities, are beneficial and should not be broken up.

48. Competition, Consumer Protection, and Regulation
Transparency and public disclosure help ensure that consumers have adequate information to make decisions.
The Consumer Financial Protection Bureau (CFPB) was established in 2011 to oversee and guide the financial lending industry.
Federal regulatory agencies include the National Weather Service, the National Highway Traffic Safety Administration, the Food and Drug Administration, and many others.
Zoning ordinances are examples of government regulations at the local level.

49. Modified Free Enterprise
The U.S. economy is now a modified free enterprise economy because of increased government intervention in economic matters.
Almost everything people do and buy is affected by one or more federal agencies.
Over the years, government’s role in the economy has evolved from consumer protection issues to promotion of economic competition and efficiency.

50. Love Canal
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51. Which of these is NOT a way the government can help maintain competitive markets? A.Breaking up monopolies B.Expanding laws against activities that cause monopolies to form C.Creating new businesses to compete with monopolies D.Leaving monopolies in place but regulating their activities

52. What is a trust? A.A group of firms designed to restrict competition or to control prices B.A group of individuals who attempt to influence government policies C.A single firm that controls the vast majority of a single market D.A government agency that regulates a market

53. What is the Sherman Act. A
What is the Sherman Act? A.One of the first monopolies in the United States B.America's first significant law against monopolies C.The law that allowed the creation of Standard Oil D.A law created to outlaw Standard Oil

54. What is price discrimination. A
What is price discrimination? A.Refusing to sell products to specific individuals B.The practice of selling the same product to different consumers at different prices if it lessens competition C.The practice of searching for the best price for a product D.Requiring all firms to sell the same product at the same price in order to increase competition

55. What type of regulatory power does the Federal Trade Commission (FTC) have? A.It can issue zoning and other local ordinances that divide parcels of land into commercial and residential housing. B.It manages the money supply, determines and executes monetary policy, and regulates some banking activities. C.It can break up monopolies and trusts like the Standard Oil Company created by John D. Rockefeller. D.It can issue cease-and-desist orders to keep companies from using unfair business practices.

56. Not all monopolies are bad
Not all monopolies are bad. Sometimes it is better to regulate a monopoly rather than break it up if A.a cease-and-desist order is not sufficiently effective. B.it can be demonstrated that the monopoly is not practicing price discrimination. C.it can be demonstrated that a monopoly can benefit from economies of scale. D.public disclosure is not a sufficient way to promote transparency.

57. Why was the Consumer Financial Protection Bureau (CFPB) created. A
Why was the Consumer Financial Protection Bureau (CFPB) created? A.To prevent another situation like the millions of low- quality home mortgages that were a major cause of the Great Recession B.To prevent people from borrowing money abroad to keep domestic banks profitable C.To save the economy from greedy producers who offer inferior products at inflated prices D.To offer alternatives to bank loans, which will help consumers by keeping down the cost of lending

58. How much of our lives are affected by government regulation. A
How much of our lives are affected by government regulation? A.None of it B.Only things that affect the government C.Any dealings with major industries like food or healthcare D.Virtually everything in our lives

59. Zoning is an example of A. federal government regulation. B
Zoning is an example of A.federal government regulation. B.state government regulation. C.local government regulation. D.individual regulation.

60. Why did the U.S. economy slowly become a modified free enterprise economy? A.It happened because firms and individuals are free to pursue their own self interests. B.It happened because people wanted it that way. C.It happened because the government is the primary determiner of how the economy operates. D.It happened because the economy is based on principles in the U.S. Constitution.

61. Chapter 7 Review and Practice
Working with a partner, answer questions 1 – 13 on p. 205 (skip 12)
For extra credit, answer questions 14 & on p. 206