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Econ chapters 7-8

perfect competition
A market structure in which a large number of firms all produce the same product and no single seller controls supply or prices
four conditions for perfect competition
many buyers and sellers,identical products,informed buyers and sellers,free market entry and exit
commodity
A product that is the same no matter who produces it.
barrier to entry
Any factor that makes it difficult for a new firm to enter a market
imperfect competition
a market structure that does not meet the conditions of perfect competition
barriers to entry
start up cost,technology
monopoly
A market in which a single seller dominates
economies of scale
Factors that cause a producer’s average cost per unit to fall as output rises
natural monopoly
A market that runs most efficiently when one large firm supplies all of the output
government monopoly
a monopoly created by the government
government monopolys
technological,franchises and licenses,industrial organizations
patent
A license that gives the inventor of a new product the exclusive right to sell it for a certain period of time
franchise
A contract that gives a single firm the right to sell its goods within an exclusive market
license
A government issued right to operate a business
price discrimination
Division of customers into groups based on how much they will pay for a good
market power
The ability of a company to control prices and total market output
monopolistic competition
a market structure in which many companies sell products that are similar but not identical
fourconditins of monpolistic competition
many firms,few barriers to entry,little control over price,differenciated products
differentiation
making a product different
nonprice competition
a way to attract customers through style, service, or location, but not a lower price
oligopoly
A market structure in which a few large firms dominate a market
nonprice competition characteristics
physical characteristics,location,service level,advertising image or status
price war
a series of competitive price cuts that lowers the market price below the cost of production
collusion
An agreement among firms to divide the market, set prices, or limit production
price fixing
An agreement among firms to charge one price for the same good
cartel
A formal organization of producers that agree to coordinate prices and production
predatory pricing
selling a product below cost to drive competitors out of the market
antitrust laws
Laws that encourage competition in the marketplace
trust
grouping of companies that dicourages competition
merger
Combination of two or more companies into a single firm
deregulation
removeal of some governmental controls over a market
sole proprietorship
A business owned by one person
business organization
the ownership structure of a company or firm
advantages of sole proprietorships
easy to start and end,few regulation,sole receiver of profit,full control
disadvantaes of soleproprietorships
unlimited personal liability,limited access to resourses,lack of permanence
business licence
authorization to operate a business issued by a local government
zoning laws
Regulations that limit how property in a given area can be used
liability
An amount owed by a business
partnership
A business in which two or more persons combine their assets and skills
general partnership
A partnership in which all owners share in operating the business and in assuming liability for the business’s debts.
limited partnership
-Must have one or more general partners and one or more limited partner
limited liability partnership
All partners are limited partners and not responsible for the debts and other liabilities of other partners
articles of partnership
A partnership agreement that spells out each partner’s rights and responsibilities
assets
Any type of tangible or intangible resources that can be measured in monetary terms.
business franchise
a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area
royalties
The share of earnings given by a franchise as payment to the franchiser
corporation
A business owned by stockholders who share in its profits but are not personally responsible for its debts
stock
A certificate of ownership in a corporation
bond
A debt security that promises to make payments periodically for a specified period of time. It is where interest rates are determined.
certificate of incorporation
license to form a corporation issued by state government
dividend
A distribution to corporate shareholders of corporate profits or income, disbursed in proportion to the number of shares held.
limited liability corporation
a type of business with limited liability for the owners, with the advantage of not paying corporate income tax
horizontal merger
the combination of two or more firms competing in the same market with the same good or service
vertical merger
the combination of two or more firms involved in different stages of producing the same good or service
conglomerate
A group of diverse companies under common ownership and run as a single organization, they all form together to make a large conglomerate.
multinational corporations
a large business that operates in many countries
cooperative
A business that is owned by the members it serves and is managed in their interest.
advantages of partnerships
easy start up,financial impact,shared decision making
disadvantaes of partnersips
unlimited liability,potential for conflict,lack of permenance

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