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Flashcards in Chapter 7 Deck (27)
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1
Q

Perfect competition

A

A market structure in which a large number of firms all produce the same product

2
Q

Commodity

A

A product that is the same no matter who produces it, such as petroleum, notebook paper, or milk

3
Q

Barrier to entry

A

Any factor that makes it difficult for a new firm to enter a market

4
Q

Imperfect competition

A

A market structure that does not meet the conditions of perfect competition

5
Q

Start-up costs

A

The expenses a firm must pay before it can begin to produce and sell goods

6
Q

Monopoly

A

A market dominated by a single seller

7
Q

Economies of scale

A

Factors that cause a producers average cost per unit to fall as output rises

8
Q

Natural monopoly

A

A market that runs most efficiently when one large firm supplies all of the output

9
Q

Government monopoly

A

A monopoly created by the government

10
Q

Patent

A

License that gives inventor of new product exclusive right

11
Q

Franchise

A

Right to sell a good or service within exclusive market

12
Q

License

A

Government issued right to operate a business

13
Q

Price discrimination

A

Division of customers into groups based on how much they will pay for a good

14
Q

Market power

A

Ability of a company to change prices and output like a monopolist

15
Q

Monopolist competition

A

Market structure in which many companies sell products that are similar but not identical

16
Q

Differentiation

A

Making a product different from other similar products

17
Q

Nonprice competition

A

Way to attract customers through style, service, or location, but not a lower price

18
Q

Oligopoly

A

Market structure in which a few large firms dominate a market

19
Q

Price war

A

Series of competitive price cuts that lowers the market price below the cost of production

20
Q

Collusion

A

Agreement among firms to divide the market, set prices, or limit production

21
Q

Price fixing

A

Agreement among firms to charge one price for the same good

22
Q

Cartel

A

Formal organization of producers that agree to coordinate prices and production

23
Q

Predatory pricing

A

Selling a product below cost to drive competitors out of the market

24
Q

Antitrust laws

A

Laws that encourage competition in the marketplace

25
Q

Trust

A

An illegal grouping of companies that discourages competition

26
Q

Merger

A

Combination of two or more companies into a single firm

27
Q

Deregulation

A

The removal of some government controls over a market