Econ Chapter 7: Market Structures

Front 1

market structure

Back 1

economic model that allows economists to examine competition among businesses in the same industry

Front 2

perfect competition

Back 2

ideal model for a market economy
numerous buyer + sellers
standardized product
freedom to enter/exit
independent buyers/sellers
well informed buyers/sellers

Front 3

price taker

Back 3

business cannot set the prices of products but instead set the market price set by supply + demand

Front 4

monopoly

Back 4

market structure in which only one seller sells a product

Front 5

cartel

Back 5

organization of sellers - act together to set prices

Front 6

price maker

Back 6

business that does not have to consider competition when setting prices

Front 7

natural monopoly

Back 7

market situation in which the costs of production are lowest when only one firm produces output

Front 8

government monopoly

Back 8

gov either owns or only authorizes one producer

Front 9

technological monopoly

Back 9

a firm controls a manufacturing methods/invention

Front 10

geographical monopoly

Back 10

exists because there are no other sellers within a region

Front 11

economics of sale

Back 11

average cost of production falls as the producer grows larger
more customers - more efficient - gov support of natural monopoly

Front 12

patent

Back 12

legal registration of an invention that gives the inventor exclusive property rights for a number of years

Front 13

monopolistic competition

Back 13

many sellers offer similar but not standardized products ex. t-shirts

Front 14

product differentiation

Back 14

ability to distinguish a product from similar products

Front 15

nonprice competition

Back 15

use factors other than price (style, service, advertising, giveaways) to convince customer to buy their product

Front 16

oligopoly

Back 16

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

Front 17

market share

Back 17

percent of total shares in a market
(in an oligopoly only a few large firms have market shares)

Front 18

start-up costs

Back 18

only few firms in an oligopoly because the expenses to enter the business are extremely high

Front 19

regulation

Back 19

government control business behavior through a set of rules/laws to promote competition + protect consumers

Front 20

antitrust legislation

Back 20

laws that define monopolies and give government the power to control them and break them up

Front 21

trust

Back 21

group of firms combined for the purpose of reducing competition

Front 22

price fixing

Back 22

businesses work together to set the prices of competing products

Front 23

market allocation

Back 23

competing businesses negotiate to divide up the market

Front 24

predatory pricing

Back 24

used by large cartels to set prices bellow what smaller producers can afford - drive them out of business

Front 25

cease and delist order

Back 25

government ruling that requires a firm to stop an unfair business practice

Front 26

public disclosure

Back 26

requires businesses to reveal product information to consumers

Front 27

deregulation

Back 27

activities taken to reduce or remove government oversight and control of business