Economics Chapter 7 Terms – Flashcards
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cease and desist order
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ruling requiring a company to stop an unfair business practice that reduces or limits competition
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patent
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a government authority to an individual or organization conferring a right
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imperfect competition
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the name give to any of three market structures that lacks one or more of the conditions required for perfect competition
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copyright
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the exclusive legal right to print, publish, perform, film or record
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public disclosure
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the requirement that businesses reveal certain information to the public
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collusion
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formal agreement to set specific prices or to otherwise behave in a cooperative manner
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public goods
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products that are collectively consumed by everyone
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positive externality
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benefit someone receives who wasn't involved in the activity that generated the benefit
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price discrimination
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the practice of selling the same product to different prices if it substantially lessens competition
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monopoly
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market structure with only one seller of a particular product
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laissez-faire
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"allow them to do", limited government's role to protecting property, enforcing contracts, settling disputes, and protecting firms agains foreign competition
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natural monopoly
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market situation where the costs of production are minimized by having a single firm produce the product
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trust
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combination of firms designed to restrict competition or control prices in a particular industry
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perfect competition
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market structure characterized by a large number of well-informed independent buyers and sellers who exchange identical products
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economies of scale
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situation in which the average cost of production falls as the firm gets larger
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product differentiation
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real or perceived differences between competing products in the same industry
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externality
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unintended side effect that either benefits or harms a third party not involved in the activity that caused it
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oligopoly
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market structure in which a few very large sellers dominate the industry
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negative externality
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the harm, cost, or inconvenience suffered by a third party because of actions by others
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price-fixing
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agreeing to charge the same or similar prices for a product
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geographical monopoly
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based on the absence of other sellers in a certain geographic area
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technological monopoly
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based on ownership or control of a manufacturing method
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Sherman Anti-trust Act
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the 1st significant law against monopolies
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Clayton Act
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outlawed price discrimination
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5 market failures
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inadequate competition, inadequate information, resource immobility, public goods, and externalities
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perfect competition
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number of sellers: lots, product: identical, entry into market: easy, control over price: none
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monopolistic competition
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number of sellers: lots, product: fair amount, entry into market: easy, control over price: competitive
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oligopoly
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number of sellers: few, product: fair amount, entry into market: difficult, control over price: some
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monopoly
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number of sellers: one seller, product: none, entry into market: almost impossible, control over price: extensive
