Key Words Flashcards
Allocative efficiency
Achieved when the economy is producing the appropriate amount of goods and services relative to consumer demand
Average cost
Total cost divided by quantity produced
Backwards integration
When a firm merges with a firm that is involved in an earlier part of the production process
Barrier to entry
A characteristic of a market that prevents firms from joining the market
Cartel
An agreement between two firms on price and output with the intention of maximising their joint profits
Competition policy
A set of measures designed to promote competition in markets and protect consumers in order to enhance the efficiency of markets
Conglomerate merger
A merger between two firms operating in different markets
Constant returns to scale
When LRAC remains constant with an increase in output
