Chapter 7 Flashcards
Perfect competition
A market structure in which a large number of firms all produce the same product
Commodity
A product that is the same no matter who produces it, such as petroleum, notebook paper, or milk
Barrier to entry
Any factor that makes it difficult for a new firm to enter a market
Imperfect competition
A market structure that does not meet the conditions of perfect competition
Start-up costs
The expenses a firm must pay before it can begin to produce and sell goods
Monopoly
A market dominated by a single seller
Economies of scale
Factors that cause a producers average cost per unit to fall as output rises
Natural monopoly
A market that runs most efficiently when one large firm supplies all of the output
Government monopoly
A monopoly created by the government
Patent
License that gives inventor of new product exclusive right
Franchise
Right to sell a good or service within exclusive market
License
Government issued right to operate a business
Price discrimination
Division of customers into groups based on how much they will pay for a good
Market power
Ability of a company to change prices and output like a monopolist
Monopolist competition
Market structure in which many companies sell products that are similar but not identical
