Econ Vocab 7

Question 1

Market structure

Answer 1

an economic model that allows economists to examine competition among businesses in the same industry

Question 2

Perfect Competition

Answer 2

the ideal model of a market economy

Question 3

Standardized product

Answer 3

a product that consumers consider identical in all essential features to other products in the same market.

Question 4

Price taker

Answer 4

a business that cannot set the prices for its products but, instead, accepts the market price set by the interactions of supply and demand

Question 5

imperfect competition

Answer 5

market structures that lack one of the conditions needed for perfect competition

Question 6

Monopoly

Answer 6

a market structure in which only one seller sells a product for which there are no close substitutes

Question 7

Cartel

Answer 7

a formal organization of sellers or products that agree to act together to set prices and limit output

Question 8

Price maker

Answer 8

a business that does not have to consider competitors when setting its prices.

Question 9

barrier to entry

Answer 9

something that hinders a business from entering a market

Question 10

Natural monopoly

Answer 10

a market situation in which the costs of production are lowest when only one firm provides output

Question 11

government monopoly

Answer 11

a monopoly that exists because the government either owns and runs the business or authorizes only one producer

Question 12

technological monopoly

Answer 12

a monopoly that exists because the firm controls a manufacturing method, an invention, or a type of technology

Question 13

geographic monopoly

Answer 13

a monopoly that exists because there are no other producers or sellers within a certain region

Question 14

economies of scale

Answer 14

a situation in which the average cost of production falls as the producer grows larger

Question 15

patent

Answer 15

a legal registration of an invention or a process that gives the inventor the exclusive property rights to that invention or process for a certain number of years

Question 16

monopolistic competition

Answer 16

many sellers offer similar, but not standardized, products.

Question 17

product differentiation

Answer 17

the attempt to distinguish a product from similar products

Question 18

Nonprice competition

Answer 18

using factors other than low price- such as style, service, advertising, or giveaways- to try to convince customers to buy one product rather than another.

Question 19

Focus group

Answer 19

a moderated discussion with small groups of consumers

Question 20

Oligopoly

Answer 20

a market structure in which only a few sellers offer a similar product, is less competitive than monopolistic competition

Question 21

market share

Answer 21

percent of total sales in a market

Question 22

start-up costs

Answer 22

the expenses that a new business must pay to enter a market and begin selling to consumers

Question 23

regulations

Answer 23

controlling business behavior through a set of rules or laws

Question 24

antitrust legislation

Answer 24

laws that define monopolies and give government the power to control them and break them up

Question 25

trust

Answer 25

a group of firms combined for the purpose of reducing competition in an industry

Question 26

merger

Answer 26

when one company combines with or purchases another to form a single firm

Question 27

Price fixing

Answer 27

which occurs when businesses work together to set the prices of competing products

Question 28

market allocation

Answer 28

occurs when competing businesses negotiate to divide up a market

Question 29

predatory pricing

Answer 29

setting prices below cost so that smaller producers cannot afford to participate in a market.

Question 30

Cease and desist order

Answer 30

a ruling that requires a firm to stop an unfair business practice

Question 31

Public disclosure

Answer 31

requires businesses to reveal product information to consumers

Question 32

deregulation

Answer 32

reducing or removing government oversight and control of business