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Unformatted text preview: STUDY GUIDE >> ECONOMICS CHAPTERS 7, 8, & 9 CHAPTER SEVEN Perfect Competition : the ideal model of a market economy five characteristics 1) Numerous buyers and sellers 2) Standardized product a product that consumers consider identical in all essential features to other products in the same market 3) Freedom to enter and exit markets (No government regulations or restrictions, AND businesses/customers arent required to participate) 4) Independent buyers and sellers (Buyers cant come together and neither can sellers to influence prices) 5) Well-informed buyers and sellers (Buyers can do comparison shopping, sellers can learn what their competitors are charging) Monopoly : A market structure in which only one seller sells a product for which there are no close substitutes. (Characteristics only one seller, control of prices, government regulations or other barriers to entry keep other firms out of the market) 1) Natural Monopoly occurs when the costs of production are lower with only one producer (EBMUD/Water Companies) 2) Government Monopoly exists when the government either owns and runs the business or authorizes only one producer (The Postal Service) 3) Technological Monopoly occurs when a firm controls a manufacturing method, invention, or type of technology ( Polaroid Cameras) 4) Geographic Monopoly exists when there are no other producers within a certain region (Professional Sports Teams all of Bay Area goes to Oakland or SF for sports) Monopolistic Competition : occurs when many sellers offer similar, but not standardized, products (T-Shirt Marketcompetitive because there are many buyers and sellers, monopolistic because each seller has...
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- Spring '12