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17 Cards in this Set

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Barriers to entry

Obstacles that stop new firms entering a market

X-inefficient

Sometimes called organisational slack, not reducing costs to their lowest level - the gap between the acand lowest possible cost

Patent laws

A grant of temporary monopoly rights over a new product

Copyright

Ownership of rights, for example to a book, giving redress at law for copying by a third party

Nationalised

Taking a firm or industry into public ownership by the state

Incumbent

Existing firms in the industry

Limit pricing

Setting a price so low that other firms will not enter the industry

Sunk costs

Irretrievable costs that occur when a firm exits an industry

Legal monopoly

A firm with 25% or more of the market share

Product differentiation

A way of distinguishing a product from that of competitors

Marginal cost pricing

Setting the price at the level of marginal cost

Average cost pricing

Setting the price at the level of average cost

Dead-weight loss

Reduction in consumer and producer surplus when output is restricted to less than the optimum level

Price discrimination

Where an identical good or service is sold to different customers at different prices for reasons not associated with costs

First degree price discrimination

When the discriminating firm can charge a separate price to each individual customer

Second degree price discrimination

When the discriminating firm can charge a separate price to different groups of customer

Third degree price discrimination

When the discriminating firm can charge a different price in each country