Chapter Seven Vocabulary: Market Structures 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 producer’s 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
a license that gives the inventor of a new product the exclusive right to sell it for a certain period of time
Franchise
the right to sell a good or service within an exclusive market
License
a 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
the ability of a company to change prices and output like a monopolist
Monopolistic Competition
a market structure in which many companies sell products that are similar but not identical
