2.  Perfect Competition – A market structure in which a large number of firms all produce the same product. Pg. 151  Monopoly – A market dominated by a single seller. Pg. 156  Monopolistic Competition – A market structure in which many companies sell products that are similar not identical. Pg. 166  Oligopoly – A market structure in which a few large firms dominate a market.

3. Market Structure ethnic groups mixed to form multi-ethnic mestizos—Native American and European descent mulattoes—African and “other” descent Pandemic – epidemic that spreads over a large area -loss of indigenous life; Loss of Local Culture -Westernization of Amerindians -language changes - Spanish & Portuguese -diffusion and power of Catholicism Standard of living on a global platform increased. Monopoly Characteristics Only One Seller – A single business controls the supply of a product that has no close substitutes Control of Prices – Monopolies act as price makers because they sell products that have no close substitutes and they face no competition Restricted, Regulated Market – Government regulations or other barriers to entry keep other firms out of the market. Def. A market structure in which a large number of firms all produce the same product Monopoly Characteristics Only One Seller – A single business controls the supply of a product that has no close substitutes Control of Prices – Monopolies act as price makers because they sell products that have no close substitutes and they face no competition Restricted, Regulated Market – Government regulations or other barriers to entry keep other firms out of the market. Perfect (Pure) Competition Characteristics 1.Numerous buyers and sellers 2. Standardized product 3. Freedom to enter and exit market 4. Independent buyers and sellers 5.Well-Informed buyers and sellers

4. Def. A market structure in which a large number of firms all produce the same product Ex. Market For strawberries Very competitive Market Structure Perfect Competition Monopolistic Competition Oligopoly Monopoly

5. Def. A market dominated by a single seller Ex. Electric Company Not Competitive Market Structure Perfect Competition Monopolistic Competition Oligopoly Monopoly

6. Def. A market dominated by a few large profitable firms Ex. Market for Air travel Not Very Competitive Market Structure Perfect Competition Monopolistic Competition Oligopoly Monopoly

7. Def. Many companies compete in an open market to sell products that are similar but not identical Ex. Gas Station Competitive Market Structure Perfect Competition Monopolistic Competition Oligopoly Monopoly

8.  All of the following are characteristics of pure competition EXCEPT —  A large number of well-informed buyers and sellers  B no buyers or sellers large enough to influence price  C more buyers or sellers easily enter the market  D barriers to buyers and sellers entering the market

9.  One seller  Complete barriers to market entry  No product differentiation  The list above describes characteristics of which of the following?  F pure competition  G monopolistic competition  H oligopoly  J monopoly

10. A. Large number of firms all producing the same product B. Assumes that the market is in equilibrium and all firms sell the product at the same price

11. A. Many buyers and sellers B. Sellers offer essentially the same product C. Buyers and sellers are well informed about products D. Sellers can enter/ exit the market freely- No Barriers

12.  Commodity- product that is the same regardless of who makes it or sells  Identical products are key- For one reason, buyers will not pay extra for one particular company’s goods  Prices in a P.C.- they are the lowest sustainable price possible

13. A. Start up cost B. Technology

14.  Why they exist- competition would drive down the price and companies could not survive that  Advantage- unwasted resources and gov’t can regulate prices  Government’s role- regulating prices and can demand what services are to be provided

15.  Effect of a monopolist’s price increase- it will generally sell less  How a monopolist maximizes profit- tries to get an output that generally sustains; revenue minus costs

16.  Barriers to entry- complete- there are no other companies entering the market  Variety of goods- none  Number of firms- one  Control over pricing- complete (only through gov’t regulation)

17. Chapter 7.3/ 7.4

18.  Defining Conditions A. Many firms B. Sell a variety of goods C. Barriers to entry tends to be low but the start up can be expensive D. Slight control over price; they can raise or lower the price because their product is a little different

19. A. Fierce competition B. New firms willing to enter the market  Consumer advantage- wide variety of goods at a fairly reasonable cost

20. 1. Physical characteristics 2. Location 3. Service level 4. Advertising, image, or status

21.  Market dominated by a few profitable firms  Characteristics: A. Few competitors B. Very high start up cost (high barrier) C. Some variety of goods

22. A. Collusion- agreement among members of oligopoly to set prices and production levels (price fixing)

23. B. Cartel- a formal organization of producers to coordinate prices and production (stronger than collusion)

24.  Both are illegal in the United States.