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economics chapter 7

Terms in this set (25)

what can a firm with market power do?
a company with market power can control prices and output
why does government usually approve of natural monopolies?
because they are the most efficient source of that good or service
what is the purpose of antitrust laws?
they are designed to encourage competition in the marketplace
factors that cause a producer's average cost per unit to fall as output rises
economies of scale
a market dominated by a single seller
monopoly
a market that runs most efficiently when one large firm supplies all of the output
natural monopoly
definition of price war
nngdnfd
a license that gives the inventor of a new product the exclusive right to sell it for a certain period of time
patent
in 2010, the justice department and the ftc released new guidelines for proposed mergers. now companies that want to merge have the chance to prove that the merger would lower costs and consumer prices or lead to a better product
false
the law of demand says that output and price are negatively related. as one rises, the other falls.
true
all monopolies have 5 traits in common:...
false
public water
provides a good example of a natural monopoly
an _____________ can form when significant barriers to entry keep new companies from entering the market to compete with existing firms
oligopoly
economist use the term __________ to describe agreements among firms to set prices and production levels
collusion
the removal of some government controls over a market ______-
deregulation
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