Market Structures in Economics

Pt. 1: Vocabulary

Complete the blanks with the correct vocabulary terms. Terms will only be used once; some will not be used.

1. Mass production resulting in greater efficiency and cost savings create______________________________.

2. A factory's air pollution that causes asthma in children is an example of a ____________________________.

3. Groups that form for economic benefits for their group are called _______________________________.

4. A market structure where prices are set by price/demand, where many produce identical products is called _____________.

5. The measure of products consumers purchase is called ________________________.

6. A market structure with a single producer, with no close substitutes is called a ________________________.

7. A product sold in the market (can be exactly the same, no matter who produces it)_____________________.

8. Obstacles that keep a producer from accessing a market are _________________________________.

9. Organization of a market, based mainly on competition is a  _______________________________________.

10. A market structure with a few firms, producing similar goods is a(n)_______________________________.

Pt. 2: Multiple Choice

Read each question carefully. Circle the letter of the most correct answer.

11. Which of the following is the best example of a cartel?

1. NASA
2. OPEC
3. Microsoft
4. Sony

12. The soft drink industry, including Coca-Cola, Pepsi Co., and the Schweppes Group are examples of:

1. Monopoly
2. Perfect competition
3. Oligopoly
4. Non-allocative markets

13. Which of the following is not an example of a barrier to entry in a market?

1. Start-up costs
2. Technology
3. Control of resources
4. Cheap rent

14. Why does brand loyalty matter?

1. It eliminates the need for substitute goods
2. It allows a company to gain market power
3. It makes products virtually the same in the market
4. All of the above

15. Why are externalities examples of producer inefficiency?

1. They fail to factor all costs of production, and all benefits to consumers
2. They fail to allow the government to control the economy
3. They fail to figure out how they can best benefit the company
4. They fail to create an efficient market structure

Pt. 3: Short answer

16. Explain the difference between a monopoly and monopolistic competition.

17.  Explain how barriers to entry may affect market structure

18. Evaluate the view that monopoly is an undesirable type of market structure

1. In which market structure would you place each of the following products: monopoly, oligopoly, monopolistic competition, or perfect competition? Why?

a. Retail market for water and sewerage services

b. Economics textbooks

c. Economics, by N. Gregory Mankiw and Mark P. Taylor

d. Photographic film

e. Restaurants in a large city

f. Car tyres

g. Breakfast cereal

h. Gold bullion

i. Air travel from any one airport