Economics Chapter 7 Vocab. Test Questions – 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
question
Commodity
answer
a product that is the same no matter who produces it, such as petroleum, notebook paper, or milk
question
Barrier to Entry
answer
any factor that makes it difficult for a new firm to enter a market
question
Imperfect Competition
answer
a merket structure that does not meet the conditions of perfect competition
question
Start-up cost
answer
the expenses a firm must pay before it can begin to produce and sell goods
question
Monopoly
answer
a market dominated by a single seller
question
Patent
answer
a license the gives the inventor of a new product the exclusive right to sell it for a certain period of time
question
Franchise
answer
the right to sell a good or service within an exclusive market
question
License
answer
a government issues right to operate a business
question
Price discrimination
answer
division of customers into groups based on how much they will pay for a good
question
Market Power
answer
the ability of a company to change its prices and output like a monopolist
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 form other similar products
question
Non-price competition
answer
a way to attract customer through style, service, or location, but not a lower price
question
Oligopoly
answer
a market structure in which a few large firms dominate a market
question
Price War
answer
a series of competitive price cuts that lowers the market price below the cost of production
question
Collusion
answer
an agreement among firms to divide the market, set prices, or limit production
question
Price Fixing
answer
an agreement among firm 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 to drive competitors out of the market
question
Antitrust laws
answer
laws that encourage competition in the marketplace
question
Trust
answer
like a cartel, an illegal grouping of companies that discourages competition
question
Merger
answer
combination of two or more companies into a single firm
question
Deregulation
answer
the removal of some government control over a market
question
Economies of scale
answer
factors that cause a producers' 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 for government
question
Business Organization
answer
an establishment formed to carry on commercial enterprise
question
Sole Proprietorship
answer
a business owned and managed by a single individual
question
Business License
answer
authorization to start a business issued by the local government
question
Zoning Law
answer
law in a city or town that designates separate areas for residency and for business
question
Liability
answer
the legally bound obligation to pay debts
question
Fringe Benefit
answer
payment other than wages or salaries
question
Partnership
answer
a business organization owned by two or more persons who agree on a specific division of responsibilities and profits
question
General Partnership
answer
partnership in which partners share equally in both responsibility and liability
question
Limited partnership
answer
partnership in which only one partner is required to be a general partner
question
Limited Liability Partnership (LLP)
answer
partnership in which all partners are limited partners
question
Articles of Partnership
answer
a partnership agreement
question
Uniform Partnership Act (UPA)
answer
act ordering common ownership interests, profit and loss sharing, and shared management responsibilities in a partnership
question
Assets
answer
money and other valuables belonging to an individual or business
question
Economics of scale
answer
a producer's average cost drops as production rises
question
Bond
answer
certificare issued by a corporation promising to repay the amount it has borrowed
question
Dividend
answer
portion of corporate profits paid out to stockholders
question
Stock
answer
share representing a portion of ownership in a company
question
Conglomerate
answer
combination of more than three businesses that make unrelated products
question
Horizontal Merger
answer
joining of two or more firms competing in the same market with the same good or service
question
Business Franchise
answer
a semi-independent business that pays fees to a parent company for exclusive rights to do business in a certain area
