Question

1 matching 64 points
state the factors that reduce competition in a market. 7.2a thinking map
lack of infrastructure makes it hard to bring buyers and sellers together
information is available to only one side of the market
land, capital, labor, and entrepreneurs do not, or will not, relocate to markets where they can earn higher returns
uncompensated side effects that either benefit or harm a third party not involved in the activity that caused it
mergers and combinations of companies result in larger and fewer firms dominating an industry

Explanation:

Each description corresponds to a specific market factor that reduces competition or creates market imperfections, defined as follows:

1. A lack of infrastructure connecting buyers and sellers is a transaction cost barrier that limits market access and competition.
2. Information available only to one market side is asymmetric information, which undermines fair competition by creating an unequal playing field.
3. Resources that do not relocate for higher returns are factor immobility, which prevents new competitors from entering or existing ones from expanding, reducing market competition.
4. Uncompensated effects on third parties are externalities, which distort market incentives and can limit competitive efficiency.
5. Mergers creating fewer large dominant firms are market concentration, which directly reduces the number of competitors in an industry.

Answer:

1. lack of infrastructure makes it hard to bring buyers and sellers together → Transaction cost barrier
2. information is available to only one side of the market → Asymmetric information
3. land, capital, labor, and entrepreneurs do not, or will not, relocate to markets where they can earn higher returns → Factor immobility
4. uncompensated side effects that either benefit or harm a third party not involved in the activity that caused it → Externality
5. mergers and combinations of companies result in larger and fewer firms dominating an industry → Market concentration