Ch.7 Flashcards
(31 cards)
Economics 12
Chapter 7 Vocabulary
accounting profit
The excess of a firm’s revenues over its costs.
capital-intensive
Production in which machinery rather than labour dominates the process, characteristic of the factory system.
collusion
An illegal agreement among competing firms to set prices, limit output, divide the market, or exclude other competitors.
command economy
An economic system in which production decisions are made by central planners.
cost per unit
A measure of a firm’s efficiency, obtained by dividing total costs by the number of units produced.
cottage system
Production carried out in the homes of workers, characteristic of medieval times.
deregulation
The opening of a market to more competition by eliminating government regulations originally put in place to limit competition.
economies of scale
The greater efficiency a firm can achieve when it produces very large amounts of output.
efficiency
A firm’s ability to produce at the lowest possible cost, measured by either its cost per unit or its unit labour cost.
fixed costs
Costs (such as rent and property taxes) that remains the same at all levels of output and must be paid whether the firm produces or not.
labour-intensive
Industry in which labour, rather than machinery, dominates the production process.
long run
A time period in which the firm can adjust both its fixed and variable costs to increase its maximum capacity.
marginal cost
The additional cost for a firm of producing one more unit of its product.
marginal revenue
The additional revenue gained by a firm from producing one more unit of its product.
monopolistic competition
A market structure in which many small to medium-sized firms sell a differentiated product, each having some control over price.
monopoly
A market structure in which one firm has complete control over supply, allowing it to set a profit-maximizing price.
natural monopoly
A field with high fixed costs (such as public utilities) in which greater efficiencies result when one firm supplies the product or provides the service.
non-price competition
Competition among firms in areas other than price (e.g., quality of product).
oligopoly
A market structure characterized by a few large firms, selling an identical or differentiated product, each with some to substantial control over price.
perfect competition
A rare market structure characterized by many sellers (selling exactly the same product) and many buyers, no barriers to entry into the market for new firms, and perfect knowledge of prices (so there are no price differences and no individual can influence them).
privatization
The sale of public assets in a government enterprise to private firms.
product differentiation
The attempt by competing firms to distinguish their product in some desirable way from that of their competitors in order to gain greater control over price.
Real Gross Domestic Product
The total value of all goods and services produced in Canada in a given year, adjusted for price changes.
