| A | B |
|---|
| Perfect information, large # buyers/sellers, identical products, & free entry in/out of market. | The 4 conditions require for a perfect competition. |
| Perfect information (what it adds to comptetion) | No one buyer or seller has control over price in the market. |
| Large # buyer/sellers (what is adds to competition) | Competition if based on price. |
| Free entry into/out of market (what it adds to competion) | Free entry in/out of market - no cost. |
| How does monopolistic comp differ from perfect comp? | The products are not identical. |
| Monopolistic refers to: | the fact that noone is allowed to make the same product. |
| It's called monopolistic COMPETITION b/c | the product compete. |
| Monopolistic comp is less efficient than perfect b/c | competition is based on product differenciation. |
| Oligopoly | a market strucuture that has a small # of sellers. |
| In oligopoly, small # of sellers leads to inefficiency b/c | the typical, legal behavior is price leading and price following. |
| A monopoly is a market structure that has | one seller. |
| A monopoly has 1 seller & is usually most inefficient is | restrict output, raise outputs. |
| Four types of monopolies: | business, government, natural, and geographical. |
| Natural monopoly | the type of monopoly that is actually very efficient in terms of production efficiency. |
| A natural monopoly will arise when: | a steadily declining average cost of production curve. |
| Why will a govt create a monopoly? | To simplify or control small market. |
| What market was deregulation successful? | airline |
| Is was successful b/c: | increased competition prices were lower and more being flown. |
| In what market was the airline business unsuccessful? | electrical distribution |
| We know the airline business was unsuccessful b/c of: | California blackouts. |
