Chapter 7- Section 1 Flashcards
Refers to the supply side of the market, or all producers collectively
Industry
The philosophy that government should not interfere with commerce or trade
Laissez-Faire
The nature and degree of competition among firms operating in the same industry
Market structure
A large number of well-informed independent buyers and sellers who exchange identical products
Perfect Competition
Large number of buyers and sellers, no single buyer or seller large enough to affect the price
First condition of prefect competition
Buyers and sellers deal in identical products with no difference in quality
Second condition of perfect competition
Each buyer and seller act independently, ensuring buyers compete against one another for the buyers dollar and buyers compete to find the best price
Third condition of perfect competition
Buyers and sellers are reasonably well informed about products and prices.
Fourth condition of perfect competition
Buyers and sellers free to enter into, conduct, or get out of business
Fifth condition of perfect competition
What sets the equilibrium price in a perfect competition?
Supply and demand
A market structure that lacks one or more of the conditions of perfect competition.
Imperfect Competition
The market structure that has all the conditions of perfect competition except for identical products
Monopolistic Competition
Real or imagined differences between competing products in the same industry
Product Differenitiation
The use of advertising, giveaways, or other promotional campaigns to convince buyers that the product is somehow better than another brands
Nonprice Competition
Changing the view of the product in the mind of the buyer
Differentiate
Monopolistic competition is easy to enter into. True or false?
True.
Market structure in which a few very large sellers dominate the industry
Oligopoly
Because oligopolistic structures are so large, ….
When one firm acts the other firms usually follow.
A formal agreement to set prices or to otherwise behave in a cooperative manner
Collusion
Agreeing to charge the same or similar prices for a product
Price-fixing
Are collisions against the law?
Yes, they restrain trade.
What is a price war?
A series of price cuts that result in unusually low prices
Easy to enter into an oligopoly. True or false?
False, it is very difficult.
Market structure with only one seller of a particular product
Monopoly
Local telephone companies, cable TV, and utilities are examples of?
Monopolies
Market situation where the costs of production are minimized by having a single firm produce the product
Natural monopoly
The exclusive right to do business in a certain area without competition
Franchise
The average cost of production falls as the firm gets larger
Economies of scale
Monopoly based on the absence of other sellers in a certain geographic area
Geographic monopoly
Monopoly based on ownership or control of a manufacturing method, process, or other scientific advance.
Technological monopoly
Exclusive right to manufacture, use, or sell any new and useful invention for a specific period
Patent
The exclusive right of authors or artists to publish, sell, or reproduce their work for their lifetime plus 50 years
Copyright
A monopoly the government owns and operates
Government monopoly
Monopolies are price makers or price takers?
Price makers, they choose the price.
