Chapter 25 Definitions Flashcards
Monopolistic Competition (12 cards)
Monopolistic Competiton
A market situation in which a large number of firms produce similar but not identical products. Entry into the industry is relatively easy
Product Differentiation
The distinguishing of products by brand name, color, and other minor attributes. Product differentiation occurs in other than perfectly competitive markets in which products are, in theory, homogeneous such as wheat or corn
Direct marketing
Advertising targeted at specific consumers, typically in the form of postal mailings, telephone calls, or emails
Mass marketing
Advertising intended to reach as many consumers as possible, typically through television, newspaper, radio, or magazine ads
Interactive marketing
Advertising that permits a consumer to follow up by directly searching for more information and placing direct product orders
Search good
A product with characteristics that enable an individual to evaluate the product’s quality in advance of a purchase
Experience good
A product that an individual must consume before the product’s quality can be established
Credence good
A product that qualities that consumers lack the expertise to assess without assistance
Informational advertising
Advertising that emphasizes transmitting knowledge about the features of a product
Persuasive advertising
Advertising that is intended to induce a consumer to purchase a particular product and discover a previously unknown taste for the item
Information product
An item that is produced using information-intensive inputs at a relatively high fixed cost but distributed for sale at a relatively low marginal cost
Short-run economies of operation
A distinguishing characteristic of an information product arising from declining short-run average total costs as more units of the product are sold
