Chapter 7 Economics Vocabulary – Flashcards
Unlock all answers in this set
Unlock answersquestion
Perfect competition
answer
A market structure in which a large number of firms all produce the same product and no single seller controls supply or prices.
question
Commodity
answer
A product, such as petroleum or milk, that is considered the same no matter who produces or sells it.
question
Barrier to entry
answer
Any factor that makes it difficult to enter a market.
question
Imperfect competition
answer
a market structure that fails to meet the conditions of perfect competition.
question
Start-up costs
answer
The expenses a new business must pay before it can begin to produce and sell goods.
question
Monopoly
answer
A market in which a single seller dominates.
question
Economies at scale
answer
Factors that cause producer's average cost per unit to fall as output rises.
question
Natural monopoly
answer
A market that runs most efficiently when one large firm supplies all of the output.
question
Government monopoly
answer
a monopoly created by the government.
question
Patent
answer
A license that gives the inventor of a new product the exclusive right to sell its goods withing an exclusive market.
question
Franchise
answer
A contract that gives a single firm the right to sell its goods within an exclusive market.
question
License
answer
A government issued right to operate a business.
question
Price discrimination
answer
The division of consumers into groups based on how much they will pay for a good.
question
Market power
answer
The ability of a company to control prices and total market output.
question
Monopolistic competition
answer
A market structure in which many companies sell products that are similar but not identical.
question
Differentiation
answer
Making a product different from other, similar products.
question
Nonprice competition
answer
A way to attract consumers through style, service, or location.
question
Oligopoly
answer
A market structure in which a few large firms dominate the market.
question
Price war
answer
A series of competitive price cuts that lowers the market price below the price of production
question
Collusion
answer
An illegal agreement among firms to divide the market, set prices, or limit production.
question
Price fixing
answer
An agreement among firms to charge one price for the same good.
question
Cartel
answer
A formal organization of producers that agree to coordinate prices and production.
question
predatory pricing
answer
selling a product below cost for a short period of time to drive competitors out of the market
question
antitrust laws
answer
laws that encourage competition in the marketplace
question
trust
answer
an illegal grouping of companies that idscouages competition, similar to a cartel
question
merger
answer
when two or more companies join to form a single firm
question
deregulation
answer
the removal of some government controls over a market
