Exam 6: The Market System: Functions, Structure, and Institutions

Economists refer to the ideal combination of the price a firm should charge and the quantity a firm should produce as

The brewing industry is dominated by a small number of very large producers who sell a differentiated product. The market structure that best fits the brewing industry is probably

A sudden massive reduction in the availability of chocolate will likely cause the price of chocolate to ________, which will ________ the quantity of chocolate demanded by consumers.

There is no single market structure where firms offer either differentiated or identical products.

The government has both encouraged and discouraged the creation of monopolies.

Goods that are very useful and highly desired are likely to be

With respect to property rights and production, explain the differences between the economic organizations known as communism, capitalism, and socialism.

Scenario 6.1: Tasha and Gloria are friends who each produce beaded headbands. Each can choose to work somewhat hard and expend $10 worth of effort, or can work extremely hard and expend $15 worth of effort. If either works somewhat hard, she can produce headbands that sell for a total of $22. If either works extremely hard, she can produce headbands which sell for a total of $30. Both Tasha and Gloria are equally good at making beaded headbands. -Refer to Scenario 6.1. Suppose the friends are forced by government to combine their businesses and share what they make. With this revision to the scenario, if both Tasha and Gloria play their dominant strategies, Tasha's net payoff will be ________ and Gloria's net payoff will be ________.

By reducing prices, competition encourages ________ transactions, which generates ________ cooperative surplus.

Which of the following is not an example of a market?

The form of economic organization in which all property is held in common is called

A sudden discovery of a new, massive source of uranium in New Mexico will likely cause the price of uranium to ________, which will ________ the quantity of uranium demanded by consumers.

As the cost of resources goes up, producers ________ production, which drives prices ________.

In a monopoly market, there is (are) ________ seller(s).

Government works to create a competitive marketplace to help foster competition, yet it also awards patents which prevent competition. Why are both competition and the patent system essential to creating a large economic pie?

Prices serve as a key means of communication between buyers and sellers.

Property rights that protect inventions are called

Explain why there is an active market for cola-flavored soft drinks in the United States but there is not an active market for sauerkraut-flavored soft drinks.

Explain the effects of communal farming on the incentive for individual farmers to expand their farms, relative to the incentives that exist in a market system.

What are the four key functions of prices in the market system?