chapter+7

chapter 7.1 Questions
 * 1) Perfect competition is a market structure in which a large number of firms all produce the same product. Many buyers and sellers participate in the market, and sellers offer identical products.
 * 2) Start up costs discourage entrepreneurs from entering a market because of the high price you have to pay and the low possibility of success.
 * 3) Two examples of barriers to entry in the magazine market are price for advertisement and which type of magazine to put it in.
 * 4) They must always deal in commodities because the buyer will not pay extra for one particular good.
 * 5) bottled water/ white socks/ baseballs/ paper clips

Chapter 7.2 Notes Questions 1-4
 * Monopoly- a market dominated by a single seller
 * Economies of sale- factors that cause a producers average cost per unit to fall as output rises
 * Market monopoly- a market that runs mostefficiently when one large firmsupplies all of the output
 * Government monopoly- a monopoly created by the government
 * Patent- a license that gives the inventor of a new product the exclusive right to sell it for a certain period of time
 * Franchise- the right to sell a good or service within an exclusive market
 * License- a government issued right to operate a business
 * Price discrimination- division of customers into groups based on how much they will pay for good
 * Market power- the ability of a company to change prices and output like a monopolist
 * 1) A firm with market power can control the price of the products there are putting out into the market.
 * 2) The government usually approves of natural monopoly because the market will run much smoother because all the output comes from one company.
 * 3) Three different forms of price discrimination are discounted airline fares, manufactures rebate offers, and senior citizen or discounts.
 * 4) Economics of scale is the decrease in unit cost of a product or service resulting from large-scaleoperations, as in mass production.

Chapter 7.3 notes questions 1-4 6
 * monopolistic competition- a market structure in which many companies sell products that are similar but not identical
 * differentiation- making a product different from other similar products
 * non price competition- a way to attract customers through service or location but not a lower price
 * oligopoly- a market structure in which a few large firms dominate a market
 * price war- a erie of competitive price cuts that lowers the market price below the cost of production
 * collusion- an agreement among firms to divide the market set prices or limit production
 * price fixing- an agreement among firms to charge one price for the same good
 * cartel- a formal organization of producers that agree to coordinate prices and production
 * 1) The four conditions of monopolistic competitions are many firms, few artificial barriers to entry, slight control over price, differentiated products.
 * 2) Economists determine whether a market is an oligopoly by seeing if a few large firms dominate the market.
 * 3) Three examples of non price competition are physical characteristics, location, ad service level.
 * 4) Price fixing and collusion help producers because firms are able to agree on one price or set a limit to how much a company can produce of a single product.
 * 5) The following would be described as monopolistic competition.
 * 1) The following would be described as monopolistic competition.

Chapter 7.4 questions 1-5
 * 1) The purpose of antitrust laws are to encourage competition in the market place.
 * 2) For the government to approve a merger it must first decide if the merging companies will make a monopoly or not and if they do then they will block a companies competition.
 * 3) Predatory pricing hurts competition by selling a product below cost to drive competitors out of the market.
 * 4) Deregulation changed banking and air travel because it removed some government control over a market.
 * 5) The government once regulated the markets because a monopoly between companies started to happen.