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Econ C7 & 8 Vocab
| Term | Definition |
|---|---|
| Economies of Sale | factors that cause a producer's average cost per unit to fall as output rises |
| Trust | illegal grouping of companies that discourages competiton |
| Franchise | right to sell good or service within an executive market |
| Oligopoly | market structure where few large firms dominate a market |
| Barrier to Entry | any factor that makes it difficult for a new firm to enter a market |
| Antitrust Laws | laws that encourage competition on the marketplace |
| Market Power | ability of a company to change prices and outputs like a monopolist |
| Differentiation | making a product different from other similar products |
| Perfect Competition | market structure in which large number of firms all produce the same product |
| Start up Costs | expenses a firm must pay before it can begin to produce and sell goods |
| Merger | combination of two or more firms into a single firm |
| Cartel | formal organization of producers that agree to coordinate prices and production |
| License | government issued right to operate a business |
| Deregulation | removal of government controls over a market |
| Commodity | product that is the same no matter who produces it |
| Price Fixing | agreement among firms to charge one price for a good |
| Price Discrimination | division of customers into groups based on how much they pay for a good |
| Monopoly | market dominated by a single seller |
| Patent | license that gives inventor of new product exclusive right to sell product for a period of time |
| Market Structure | defined by characteristics, such as number of sellers in market, product produced and sold, how easy or difficult for new firms to enter market |
| Price Takers | seller that can sell all its output at equilibrium price but can sell non of its output at any other price |
| Monopolistic Market | market structure characterized by a single seller, sale of its product has no close substitutes, and extremely high barriers to entry |
| Price Searchers | seller than can sell some of its outputs at various prices |
| Public Franchise | right granted to a firm by the government that permits the firm to provide a particular good or service and exclude all others from doing so |
| Natural Monopoly | firm with such a low average total cost that only it can survive in the market |
| Monopolistic Competition | market structure in which many companies sell products that are similar but not identical |
| Collusion | agreement among firms to divide the market, set prices, or limit production |
| Assests | money and other valuables belonging to an individual or business |
| Bond | formal contract to repay borrowed money with interest at fixed intervals |
| Corporation | legal entity owned by individual stockholders |
| Economic Institution | company or organization that deals with managing the distribution of money, goods and services in an economy |
| Entrepreneur | ambitious leader who combines the factors of productions to create and market new goods and services |
| Fringe Benefits | payment other than wages or salaries |
| Horizontal Merger | combination of two or more firms competing in same market with the same good or service |
| Incentive | expectation that encourages people to behave a certain way |
| Limited Liability Partnership | partnership in which all partners are limited partners |
| Limited Partnership | partnership in which only one partner is required to be a general partner |
| Multinational Corporation | large corporation that produces and sells its goods and services throughout the world |
| Parntership | business or organization owned by two or more persons who agree on a separate division of responsibilities and profit |
| Sole Proprietorship | business owned and managed by a single individual |
| Stock | certificate of ownership in a corporation |
| Vertical Merger | combination of two or more firms involved in different stages or producing the same good or service |
| Business Firm | organization that uses resources to produce goods and services that are sold to consumers, other firms, or government |
| Franchiser | entity that offers a franchise |
| Franchisee | person or group that buys a franchise |
| Franchise pt.2 | contract which firm lets a person or group use its name and sell its goods in exchange for making certain payments and meeting certain requirements |
| Asymmetric Information | one party to a transaction has information that another party does not have |
| Board of Directors | decision making body in a corporation. Decides policies and goals, among other things |
| Fixed Cost | a cost, or expense, that is the same no matter how many units of a good are produced |
| Variable Cost | cost, or expense, that changes with the number of units of a good produced |
| Total Cost | sum of fixed costs plus variable costs |
| Marginal Cost | cost of producing an additional unit of a good; change in total cost that results from producing an additional unit of a good |
| Marginal Revenue | revenue from selling an additional unit of a good; change in total revenue that results from selling an additional unit of output |
| Law of Diminishing Marginal Returns | additional units of one resource are added to another resource, in fixed supply, eventually the additional output will decrease |
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