Chapter One Study Guide

Market Structures and Market Failures

This guide will help you prepare for the vocabulary and concepts that you need to know. Turn this completed study guide in before you take the quiz and earn an extra 10% on the quiz grade.

Vocabulary/Terms to know: Define each on a separate sheet of paper. Market Structure Perfect Competition Monopoly Oligopoly Monopolistic Competition Market Failure Externality Public Goods

Questions to answer: Answer on a separate sheet of paper. 1. What questions are helpful to ask when trying to determine market structure? 2. In a market with perfect competition, how are prices determined? 3. In what market structure do PRODUCERS have the most market power? 4. How do economies of scale affect the market for electric power in a community? 5. Why is competition among restaurants in a big city an example of monopolistic competition? 6. Give a few examples of externality. 7. Why do goods made in factories that cause pollution tend to be overproduced? 8. Why doesn’t the market system work to provide street lighting and other public goods? 9. What is the market structure of babysitting?