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ch. 7&8 vocab terms
Chapter 7 & 8 vocab terms for economics
| Term | Definition |
|---|---|
| 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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