Chapter+7+Work

Read pg 151-154...Answer questions # 1-4 and define all vocabulary.
 * 1) Many buyers and sellers participate in the market, sellers offer identical products, buyers and sellers are well informed about products, sellers are able to enter and exit the market freely.
 * 2) Start up costs discourage entrepreneurs because in order to make money in a free market society you have to have money and with initial costs of rent and supplies you have so much to spend before you can make a profit.
 * 3) Two kinds of barriers of entry are start up costs and technology.
 * 4) Because almost a majority of the time someone else will be selling your product or offering your service.
 * Perfect competition-The simplest market structure that offers "pure competition"
 * Commodity- a product that is considered the same regardless of who makes or sells it.
 * Barriers to entry: Factors that make it difficult for new firms to enter a market.
 * Imperfect Competition- Unequal competition where one firm has an unfair advantage over other firms.
 * Start up costs- the expenses that a new business must pay before the first product reaches the customer.

Pg.164 1-4 pg 171 1-4 7.2
 * 1) Market power has the ability to control prices and total market output.
 * 2) Because now the market can run more efficiently when one large firm provides all of the output.
 * 3) Discounted airline fares, manufacturers rebate offers, senior citizen or student discounts.
 * 4) Economics of sale are characteristics that cause a producers average cost to drop as production rises.

7.3
 * 1) Many firms, few artificial barriers to entry, slight control over price, and differential products.
 * 2) If an industry produces at 70-80% of the output.
 * 3) Physical characteristics, location, service level, advertising, image, or status
 * 4) Collusion allows oligopoly members to get together and then from there discuss price fixing and allow producers adjust their output and production.

Read pg 172-176...Answer questions #1-4 on pg 176 1. Antitrust laws are used to keep firms from controlling the price and supply of important goods. 2. Only if the merger would lower costs and consumer prices or lead to a better product. 3. Predatory pricing hurts competition cause the predator loses money trying each time to drive out rivals. 4. Deregulation changes the prices on both the air travel industry and banking by telling them how much they can charge per customer.

Chapter 7 Review Pg 178 #1-7, 9-14
 * 1) Price discrimination.
 * 2) Perfect Competition
 * 3) Oligopoly
 * 4) commodities
 * 5) patent
 * 6) natural monopoly
 * 7) collusion
 * 8) Because the buyers and sellers are both well-informed buyers and sellers. You usually know what your doing when you enter the stock market.
 * 9) Natural monopolies are made when its is known that only one firm should have that market. Government ones are usually made to help maintain low prices but the government usually regulates them
 * 10) 1) many firms. 2) Few artificial barriers to entry 3) Slight control over price 4) differential products.
 * 11) They create rules to make it so that monopolies DONT form and they put price laws so that competition doesnt die and in turn create monopolies.
 * 12) Because if the firms are huge then their prices and output and profits will differ than a smaller newer firm. But they all are the same in a way that they must all pay those fees.
 * 13) The trade offs would be that the government would set price laws and go against monopolies but then at least you would be able make a chance to enter the competition.
 * 1) The trade offs would be that the government would set price laws and go against monopolies but then at least you would be able make a chance to enter the competition.