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6 Cards in this Set
- Front
- Back
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Economies of Scale |
The cost advantages that enterprises obtain due to their size, output, or scale of operation with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output. (ATC) |
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Rent Seeking |
When a company, organization, or individual uses their resources to obtain an economic gain from others without reciprocating any benefits back to society through wealth creation. |
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Natural Monopoly |
A monopoly in an industry in which it is most efficient (involving the lowest long-term average cost) for production to be permanently concentrated in a single firm rather than contested competitively. |
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Barriers to Entry |
Obstacles that make it difficult to enter a given market. |
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Product Differentiation |
The process of distinguishing a product or service from others to make it more attractive to particular target market. This involves differentiating it from competitors' products as well as a firm's own products. |
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Why do firms practice Price Discrimination? |
First Degree (perfect): To capture the highest amount of profit for each sale. Second Degree: To increase its profit margin on a subset of its consumer base. Third Degree: Catering to the price elasticity of demand of specific consumer subsets in order to sell higher quantities. |
