chap 7 Flashcards
market structure
is an economic model of competition among businesses in the same industry.
perfect competition
is the ideal model of a market economy.
standardized product
is one that consumers see as identical regardless of producer.
price taker
is a business that accepts the market price determined by supply and demand.
imperfect competition
occurs in markets that have few sellers or products that are not standardized.
monopoly
occurs when there is only one seller of a product that has no close substitutes.
cartel
is a group that acts together to set prices and limit output.
price maker
is a firm that does not have to consider competitors when setting the prices of its products.
barrier to entry
makes it hard for a new business to enter a market
natural monopoly
occurs when the costs of production are lowest with only one producer.
government monopoly
exists when the government either owns and runs the business or authorizes only one producer.
technological monopoly
occurs when a firm controls a manufacturing method, invention, or type of technology.
geographic monopoly
exists when there are no other producers within a certain region
economies of scale
occur when the average cost of production falls as the producer grows larger.
patent
gives an inventor the exclusive property rights to that invention or process for a certain number of years
monopolistic competition
occurs when many sellers offer similar, but not standardized, products.
product differentiation
is the effort to distinguish a product from similar products.
non price competition
occurs when producers use factors other than low price to try to convince customers to buy their products
focus group
is a moderated discussion with small groups of consumers.
oligopoly
is a market structure in which only a few sellers offer a similar product.
market share
is a company’s percent of total sales in a market.
start-up costs
are the expenses that a new business faces when it enters a market.
regulation
is a set of rules or laws designed to control business behavior
antitrust legislation
defines monopolies and gives government the power to control them.
trust
is a group of firms combined in order to reduce competition in an industry.
merger
is the joining of two firms to form a single firm.
price fixing
occurs when businesses agree to set prices for competing products.
market allocation
occurs when competing businesses divide a market amongst themselves.
predatory pricing
occurs when businesses set
prices below cost for a time
to drive competitors out of
a market.
cease and desist order
requires a firm to stop an unfair business practice.
public disclosure
is a policy that requires businesses to reveal product information.
deregulation
reduces or removes government control of business.
