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ch. 7&8 vocab terms

Chapter 7 & 8 vocab terms for economics

TermDefinition
Perfect competition Many firms competing.
Commodity Goods or services available in in the market for purchase.
Barrier to entry A constraint that protects a firm from potential competitors.
Imperfect competition A market structure that fails to meet the conditions of perfect competition.
Start-up Costs The expenses a new business must pay before it can begin to produce and sell goods.
Monopoly Only 1 firm in the industry.
Economies for sale Factors that cause a producer's average cost per unit to fall as output rises.
Natural monopoly A market that runs most efficiently when one large firm supplies all of the output.
Government monopoly A monopoly created by the government.
Patent A license that gives the inventor of a new product the exclusive right to sell it for a specific period of time.
Franchise A contract that gives single firm the right to sell its goods within and exclusive market.
License A government-issued right to operate a business.
Price discrimination A division of consumers into groups based on how much they will pay for a good.
Market power The ability of a company to control prices and total market output.
Monopolistic competition A market structure in which many companies sell products that are similar but not identical.
Differentiation Making a product different from other, similar products.
Non-price competition A way to attract customers through style, service, or location, but not a lower price.
Oligopoly A market structure in which a small number of firms has the large majority of market share.
Price war A series of competitive price cuts that lowers the market price below the cost of production.
Collusion An illegal agreement among firms to divide the market, set prices, or limit production.
Price fixing An agreement among firms to charge one price for the same good.
Cartel A formal organization of producers that agree to coordinate prices and production.
Predatory pricing Selling a product below cost for a short period of time to drive competitors out of the market.
Antitrust laws Laws that encourage competition in the marketplace.
Trust An illegal grouping of companies that discourages competition.
Merger When two or more companies join to form a single firm.
Deregulation The removal of some government controls over a market.
Sole propiertorship A business owned and managed by a single individual. A neighborhood market.
Business organization An establishment formed to carry on commercial enterprise.
Business license Authorization to start a business issued by the local government.
Zoning laws Law in a city or town that designates separate areas for residency and for business.
Liability The legally bound obligation to pay debts.
Fringe benefits Payment other than wages or salaries.
Partnership A business organization owned by two or more persons who agree on a specific division of responsibilities and profits.
General partnership Partnership in which partners share equally in both responsibility and liability.
Limited partnership Only one partner is required to be a general partner.
Limited liability partnership All partners are limited partners.
Articles of partnership A partnership agreement.
Assets Money and other valuables belonging to individual or business.
Business franchise A semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area. A convenience store that has branches nationwide.
Royalties Share of earnings given as payment.
Corporation Has a C.E.O and shareholders.
Stock A certificate of ownership in a corporation.
Closely held corporation Corporation that issues stock to only a few people, often family members.
Publicly held corporation Corporation that sells stock on the open market.
Bond A formal contract to repay borrowed money with interest at fixed intervals.
Certificate of incorporation License to form a corporation issued by state government.
Dividened The portion of corporate profits paid out to stockholders.
Limited liability corporation All partners are limited partners.
Horizontal merger The combination of two or more firms competing in the same market with the same good or service.
Vertical merger The combination of two or more firms involved in different stages of producing the same good or service.
Conglomerate Business combination merging more than three businesses that make unrelated products.
Multinational corporation Large corporation that produces and sells its goods and services throughout the world.
Cooperative A business organization owned and operated by a group of individuals for their mutual benefit.
Consumer cooperative Retail outlet owned and operated by consumers.
Service cooperative Cooperative that provides a service rather than a good.
Producer cooperative Agricultural marketing cooperative that helps members sells their products.
Nonprofit cooperative Institution that functions much like a business, but does not operate for the purpose of generating a profit.
Professional organization Nonprofit organization that works to improve the image, working conditions, and skill levels of people in particular occupations.
Better Business Bureau US nationwide organization that uses established criteria to rate the ethical and community standing of a firm and provides this information as a means to maintain a high level of trust between the business and the public.
Monopoly market The market price will be greater than the price in a perfectly competitive market.
Created by: Katwill678
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