Economics Chapter 7

Front 1

perfect competition

Back 1

large number of firms all producing essentially the sme product

Front 2

commodity

Back 2

product that is considered the same regardless of who makes it or sells it

Front 3

barrier to entry

Back 3

factors that make it difficult for new firms to enter a market

Front 4

start-up costs

Back 4

expenses that a new business must pay before the first product reaches the customer

Front 5

monopoly

Back 5

a market dominated by a single seller. prevent firms from entering a market that has a single suppliers

Front 6

economies of scale

Back 6

characteristics that cause a producer's average cost to drop as production rises

Front 7

natural monopoly

Back 7

a market that runs most efficiently when one large firm enters the market

Front 8

government monopoly

Back 8

a monoply created by the government

Front 9

patent

Back 9

licenses that give the inventor of a new product the exclusive right to sell it for a certain time period

Front 10

franchise

Back 10

a contract issued by a local authority that gives a single firm the right to sell its goods within an exclusive market

Front 11

license

Back 11

grants firms the right to operate a business

Front 12

natural monopolies

Back 12

market that runs most efficiently when one large firm provides all of the output

Front 13

market power

Back 13

the ability to control prices and total market output

Front 14

price discrimination

Back 14

the division of customers into groups based on how much they will pay for a good

Front 15

Government Monopoly

Back 15

a monopoly created by the government

Front 16

industrial organizations

Back 16

sports leagues, companies in an industry can restrict the number of firms in the market

Front 17

How do firms with monopoly set output?

Back 17

1. maximize profits
2. monopolist produces fewer goods at a higher price
3. monopolist sets output at a point where marginal revenue is equal to marginal cost

Front 18

Are prices of goods the same from all producers in a perfectly competitive market?

Back 18

yes

Front 19

Do producers have the ability to enter or exit the market whenever they want?

Back 19

yes

Front 20

monopolistic competition

Back 20

many companies compete in an open market to sell products that are similar but not identical

Front 21

differentiation

Back 21

enables a monopolistically competitive seller to profit from the differences between his or her products and competitors' products

Front 22

nonprice competition

Back 22

competition through ways other than lower prices

Front 23

oligopoly

Back 23

a market dominated by a few large profitable firms.

Front 24

price war

Back 24

when competitors cut their prices very low to win business

Front 25

collusion

Back 25

an agreement among members of an oligopoly to set prices and prodution level

Front 26

price fixing

Back 26

an agreement among firms to sell at the same or very similar prices

Front 27

cartel

Back 27

an agreement by a formal organization of producers to coordinate prices and production

Front 28

predatory priceing

Back 28

selling a product below cost to drive competitior out of the market

Front 29

antitrust laws

Back 29

laws that encourage competition in the marketplace

Front 30

trust

Back 30

business combination similar to a cartel

Front 31

merger

Back 31

combination of 2 or more companies into a single firm

Front 32

deregulation

Back 32

the remoacal of some government controls over a market