Econ Unit 2 Exam

What market structure has many sellers, differentiated products, and little control over prices?

Monopolistic Competition

What market structure is the least competitive with only one seller who can set prices?

Monopoly

What concept do economists use to assess how competitive a market is?

Market Structure

What market structure has few sellers, similar or differentiated products, and some control over prices?

Oligopoly

What is an economic model that allows economists to examine the nature and degree of competition among businesses in the same industry?

Market Structure

Why do perfectly competitive markets not exist in the real world?

External factors such as government intervention and subsidies create imperfections.

How did the De Beers diamond business dominate the industry?

By owning and controlling most of the world's diamond mines and limiting the supply of diamonds.

What is an example of a geographical monopoly?

A business that controls all resources or trade in a specific region, such as a sole provider of oil in a remote area.

How does increased competition in markets typically affect prices and quantities?

It usually leads to lower overall prices and greater quantities of goods and services.

Why is the claim that a restaurant industry is a monopoly incorrect?

Monopolies require only one seller, whereas restaurants compete with differentiated products.

What is outsourcing?

The practice of contracting with an outside company, often in a foreign country, to provide goods and/or services.

What is a glass ceiling?

The artificial barrier that women and minorities have faced in the workplace, preventing them from being promoted despite having the necessary skills and experience.

What is an equilibrium wage?

The point at which the number of workers available is equal to the number of workers needed.

What is collective bargaining?

The process of negotiation between businesses and their organized employees to establish wages and improve working conditions.

What are right-to-work laws?

Legislation that made it illegal to require workers to join unions.

What is a common tradeoff for gig workers?

In exchange for flexible schedules and quick payments, gig workers often face job insecurity and a lack of benefits.

Why is a producer's demand for labor called derived demand?

Because the demand for labor is derived from the consumers' demand for the goods and services that the producer provides.

Why do doctors and lawyers typically earn more than house cleaners or fast-food employees?

They possess higher human capital, requiring many years of specialized schooling and training.

What was the name of the labor union formed by Uriah Stephens in 1869?

Knights of Labor

What were the primary goals of the Knights of Labor?

They fought for an 8-hour work day and an end to child labor.

What are the characteristics of a corporation?

Professional managers, limited liability, unlimited life, heavy regulation, and it is a formal legal entity.

What are the characteristics of a nonprofit organization?

Requires a government charter, has unlimited life, no required taxes, benefits society, and provides goods or services for free or at a low cost.

What are the characteristics of a sole proprietorship?

The owner is their own boss, there are few regulations, the owner keeps all profits, it has limited life, and the owner has unlimited liability.

What are the characteristics of a franchise?

Resources, training, and products are provided at low cost, access to advertising, no guarantee of success, profits are shared with the overseer, and there is a loss of control.

What are the characteristics of a partnership?

Co-ownership, few regulations, limited life, unlimited liability, and potential for conflict.

What is the difference between a horizontal merger and a vertical merger?

A horizontal merger is the merging of two businesses that supply similar or the same good; a vertical merger is the merging of two businesses that focus on two different steps in the production or marketing of the same good.

What does it mean when a business organization has a limited life?

It means the business in its original form only lives as long as its owner; if the owner dies, retires, or leaves, the business will either close or restructure.

What are the three types of partnerships?

General partnership, limited partnership, and limited liability partnership (LLP).