All Chapter 6- Flashcards
A group of firms that produce similar products or provide similar services
Industries
The purest form of competition, also called pure competition
Perfect competition
The situation that arises when a single firm is the only supplier of a good for which no substitute exists
Monopoly
How is known each firm in the market because it has no real control over the price it receives for its product- the firm takes whatever price it can get
Price taker
Things necessary to have complete monopoly of an industry:
- A firm must be sole supplier of a good or service.
- There must be no close substitutes for the firm’s product.
- Entry into the market must be blocked.
Government often grant __________ in certain areas in order to encourage production.
Legal monopolies
Occurs when a single firm can fill the demand for a good more efficiently than if there were multiple firms in the industry.
Natural monopoly
When the market is the one in which each firm promotes a differentiated product
Monopolistic competition
A market that occurs when an industry is dominated by only a few firms
Oligopolies
Characteristics of an oligopolistic market
There are only a few firms in the entire industry
Firms in an oligopoly may sell products that are either differentiated or virtually the same
Potential firms are discouraged by the existence of significant entry barriers
When all firms get together is called?
Collusion
One of the first and most important antitrust laws was the…
Sherman Act
A collusion of businesses which join together to restrict or eliminate competition
Trust
Act that outlawed several practices that were not specifically addressed in earlier laws
Clayton act
Force the consumer to buy a certain product before he can buy the product he really wants
Tying contracts
Selling the same type of goods at different prices to different buyers
Price discrimination
A governmental agency whose purpose is to investigate trade practices
Federal Trade Commission
Situations in which governmental power is neccessary
- When a business compromises national security
- When a business threatens the safety or health of consumers through fraud or deceit
- When a company or group of companies conspires to hinder free competition in the marketplace
- When a national emergency, such as war, disrupts the normal market cycle
- When a labor organization breaks the law or uses intimidation tactics against workers
- When the public safety or national security is endangered by labor strikes or unrest
- When the purchasing of private property is necessary for the public good or safety
- When an industry is under natural monopoly
The quality of producing effectively with a minimum of waste
Efficiency
The total amount invested in the production of a good
Input
The total amount of a good that is produced
Output
The sum of all the factors of production used in making goods
Total cost
The sum cost of all the factors of production used in producing one unit of a good
Average cost
3 things that we need for mass production
Division of labor, or specialization
Standardized parts
Automatic conveyance (the assembly line)
The ability of one entity to produce goods or provide services more efficiently than his competitors when given the same resources
Absolute advantage
The production of goods in which a country or region has absolute or comparative advantage
Geographic advantage
The theory that domestic manufacturers need government protection against foreign competitors
Protectionism
Whenever there are no restrictions or penalties placed upon the exchange of goods is called
Free trade
Taxes that must be paid on imported goods before they are allowed to enter an area
Tariffs
Person who advocate of the principle of comparative advantage
David Ricardo
