Chapter 9 Terms Flashcards
A group of businesses that share common concerns
Industry
____________ _________ are visibly different from one firm to another
Differentiated products
Products that are exactly alike regardless of which firm produced them.
Undifferentiated products
Any significant obstacle that prevents or hinders a new firm from entering an industry and competing on an equal basis with other firms.
Barrier to entry
_______ ________ to _______ occurs when firms already in the industry own all the vital natural resources that a new firm would need to enter the market
Natural barriers to entry
Government regulations, such as licensing requirements or patents, which are an exclusive right to manufacture a new invention.
Artificial barriers to entry
When there are many producers selling an identical product, no single firm controls the price, and businesses find it relatively easy to enter and exit the market
Perfect competition
Many producers of slightly different goods, and each firm has some control over price and can enter and exit the market with relative ease
Imperfect competition
The word ____ literally means “Selling by a few”
Oligopoly
An industry in which the top 4 firms account for 75 percent of the market sales
Tight oligopoly
Top 4 firms account for 50-70% of industry’s total sales
Loose oligopoly
An oligopoly composed of exactly 2 firms
Duopoly
An agreement among a small number of producers to reduce output and increase price
Collusion
When producers form collusive agreements in countries in which they are legal or when the agreement spans across national borders.
Cartel
A ______ is a form of market organization in which there is only one supplier in the industry
Monopoly
When a firm controls 100% of a resource that is essential to an industry
Natural monopoly
When the government allows a firm exclusive right to provide a good or service.
Legal monopoly
One of big business’s favorite ways to limit competition with out a monopoly. The largest form would convince other forms to put their stock in a trust account. The manager would look after the affairs of the larger group and distribute the profits.
Trust
Firms were skirting the sheens act by placing one or more directors on the boards of competing firms
Interlocking directorates
Big companies requiring small companies desiring to buy from them ha dot purchase their full line of products.
Tying contracts
Corporations could not take over other firms by purchasing their common stock if the effect was to limit competition significantly
Anticompetitive takeovers
The Clayton act made it unlawful for firms to sell the same goods to different buyers at different prices
Price discrimination
The word ___ refers to the arrangements that people have developed for trading with one another, and competition is the struggle each firm experiences as it seeks to survive and then thrive within those arrangements
Market
