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Economics
Economics Chapter Seven
| Term | Definition |
|---|---|
| perfect competition | a market structure in which large number of firms all produce the same product and no single seller controls supply or prices |
| commodity | a product, such as petroleum or milk, that is considered the same no matter who produces or sells it |
| barrier to entry | any factor that makes it difficult for a new firm to enter a market |
| 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 | a market in which a single seller dominates |
| economies of scale | 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 a single firm the right to sell its goods within an exclusive market |
| license | a government-issued right to operate a business |
| price discrimination | the 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 |
| differentation | making a product different from other, similar products |
| nonprice competition | a way to attract customers through style, service, or location, but not a lower price |
| oligopoly | a market structure in which a few large firms dominate a market |
| 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 competitors out of the market |
| antitrust laws | laws that encourage competition in the marketplace |
| trust | an illegal grouping of companies that discourages competition, similar to a cartel |
| merger | when two or more companies join to form a single firm |
| dergulation | the removal of some government controls over a market |
Created by:
sabrina.kizy
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