Econ chapters 7-8 – Flashcards
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perfect competition
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A market structure in which a large number of firms all produce the same product and no single seller controls supply or prices
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four conditions for perfect competition
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many buyers and sellers,identical products,informed buyers and sellers,free market entry and exit
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commodity
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A product that is the same no matter who produces it.
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barrier to entry
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Any factor that makes it difficult for a new firm to enter a market
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imperfect competition
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a market structure that does not meet the conditions of perfect competition
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barriers to entry
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start up cost,technology
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monopoly
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A market in which a single seller dominates
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economies of scale
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Factors that cause a producer's average cost per unit to fall as output rises
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natural monopoly
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A market that runs most efficiently when one large firm supplies all of the output
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government monopoly
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a monopoly created by the government
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government monopolys
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technological,franchises and licenses,industrial organizations
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patent
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A license that gives the inventor of a new product the exclusive right to sell it for a certain period of time
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franchise
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A contract that gives a single firm the right to sell its goods within an exclusive market
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license
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A government issued right to operate a business
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price discrimination
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Division of customers into groups based on how much they will pay for a good
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market power
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The ability of a company to control prices and total market output
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monopolistic competition
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a market structure in which many companies sell products that are similar but not identical
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fourconditins of monpolistic competition
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many firms,few barriers to entry,little control over price,differenciated products
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differentiation
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making a product different
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nonprice competition
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a way to attract customers through style, service, or location, but not a lower price
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oligopoly
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A market structure in which a few large firms dominate a market
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nonprice competition characteristics
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physical characteristics,location,service level,advertising image or status
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price war
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a series of competitive price cuts that lowers the market price below the cost of production
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collusion
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An agreement among firms to divide the market, set prices, or limit production
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price fixing
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An agreement among firms to charge one price for the same good
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cartel
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A formal organization of producers that agree to coordinate prices and production
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predatory pricing
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selling a product below cost to drive competitors out of the market
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antitrust laws
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Laws that encourage competition in the marketplace
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trust
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grouping of companies that dicourages competition
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merger
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Combination of two or more companies into a single firm
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deregulation
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removeal of some governmental controls over a market
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sole proprietorship
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A business owned by one person
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business organization
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the ownership structure of a company or firm
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advantages of sole proprietorships
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easy to start and end,few regulation,sole receiver of profit,full control
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disadvantaes of soleproprietorships
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unlimited personal liability,limited access to resourses,lack of permanence
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business licence
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authorization to operate a business issued by a local government
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zoning laws
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Regulations that limit how property in a given area can be used
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liability
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An amount owed by a business
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partnership
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A business in which two or more persons combine their assets and skills
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general partnership
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A partnership in which all owners share in operating the business and in assuming liability for the business's debts.
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limited partnership
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-Must have one or more general partners and one or more limited partner
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limited liability partnership
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All partners are limited partners and not responsible for the debts and other liabilities of other partners
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articles of partnership
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A partnership agreement that spells out each partner's rights and responsibilities
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assets
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Any type of tangible or intangible resources that can be measured in monetary terms.
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business franchise
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a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area
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royalties
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The share of earnings given by a franchise as payment to the franchiser
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corporation
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A business owned by stockholders who share in its profits but are not personally responsible for its debts
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stock
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A certificate of ownership in a corporation
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bond
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A debt security that promises to make payments periodically for a specified period of time. It is where interest rates are determined.
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certificate of incorporation
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license to form a corporation issued by state government
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dividend
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A distribution to corporate shareholders of corporate profits or income, disbursed in proportion to the number of shares held.
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limited liability corporation
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a type of business with limited liability for the owners, with the advantage of not paying corporate income tax
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horizontal merger
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the combination of two or more firms competing in the same market with the same good or service
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vertical merger
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the combination of two or more firms involved in different stages of producing the same good or service
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conglomerate
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A group of diverse companies under common ownership and run as a single organization, they all form together to make a large conglomerate.
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multinational corporations
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a large business that operates in many countries
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cooperative
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A business that is owned by the members it serves and is managed in their interest.
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advantages of partnerships
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easy start up,financial impact,shared decision making
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disadvantaes of partnersips
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unlimited liability,potential for conflict,lack of permenance
