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27 Cards in this Set
- Front
- Back
market structure
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economic model that allows economists to examine competition among businesses in the same industry
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perfect competition
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ideal model for a market economy
numerous buyer + sellers standardized product freedom to enter/exit independent buyers/sellers well informed buyers/sellers |
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price taker
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business cannot set the prices of products but instead set the market price set by supply + demand
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monopoly
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market structure in which only one seller sells a product
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cartel
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organization of sellers - act together to set prices
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price maker
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business that does not have to consider competition when setting prices
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natural monopoly
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market situation in which the costs of production are lowest when only one firm produces output
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government monopoly
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gov either owns or only authorizes one producer
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technological monopoly
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a firm controls a manufacturing methods/invention
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geographical monopoly
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exists because there are no other sellers within a region
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economics of sale
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average cost of production falls as the producer grows larger
more customers - more efficient - gov support of natural monopoly |
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patent
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legal registration of an invention that gives the inventor exclusive property rights for a number of years
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monopolistic competition
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many sellers offer similar but not standardized products ex. t-shirts
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product differentiation
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ability to distinguish a product from similar products
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nonprice competition
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use factors other than price (style, service, advertising, giveaways) to convince customer to buy their product
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oligopoly
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market structure with
1. few buyers + sellers 2. standardized or differentiated products 3. more control of price 4. little freedom to enter/exit the market |
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market share
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percent of total shares in a market
(in an oligopoly only a few large firms have market shares) |
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start-up costs
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only few firms in an oligopoly because the expenses to enter the business are extremely high
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regulation
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government control business behavior through a set of rules/laws to promote competition + protect consumers
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antitrust legislation
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laws that define monopolies and give government the power to control them and break them up
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trust
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group of firms combined for the purpose of reducing competition
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price fixing
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businesses work together to set the prices of competing products
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market allocation
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competing businesses negotiate to divide up the market
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predatory pricing
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used by large cartels to set prices bellow what smaller producers can afford - drive them out of business
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cease and delist order
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government ruling that requires a firm to stop an unfair business practice
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public disclosure
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requires businesses to reveal product information to consumers
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deregulation
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activities taken to reduce or remove government oversight and control of business
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