Economics chapter 6 and 7
price discrimination
selling the same good at a different price to different buyers
monopoly
In this competition type, a firm must be the sole supplier of a good/service, there must be no substitutes for the firm's product, and entry to the market must be blocked
Government Intervention Circumstances
When a business -compromised national security -threatens safety or health through fraud/deceit -or group of businesses conspire to hinder free competition -In case of a national emergency -when a labor org. breaks the law of uses intimidation against workers -when labor strikes/unrest endanger public safety or national security -when the purchasing of private property is needed for the public good -when an industry is under a natural monopoly
trust
a collusion of businesses which join together to restrict of eliminate competition
oligopoly
a market that occurs when an industry is dominated by only a few firms
legal monopolies
governments grant this in the form of patents, trademarks, or copyrights, which are necessary to help an individual or a business protect investments
industries
groups of firms that produce similar products or services
oligopoly
in this type of competition, there are only a few firms which may sell differentiated or very similar products, and potential firms are discouraged by entry barriers
monopolistic competition
in this type of competition, there must be a large number of firms which provide differentiated products, and are able to easily enter or exit the market
Clayton Act
law which outlawed tying contracts and price discrimination
tariffs
taxes that must be paid on imported goods before they are allowed to enter an area
comparative advantage
the ability of an entity to produce a good or service at an opportunity cost that is lower than that of another producer
absolute advantage
the ability of one entity to produce goods or provide services more efficiently than his competitors when given the same resources
the free market
the biggest defender of the American freedom from harmful monopolies
price taker
the name of a firm in a perfectly competitive market which has no control over what he charges
geographic specialization
the production of goods in which a country of region has absolute or comparative advantage
efficiency
the quality of producing effectively with a minimum of waste
monopoly
the situation that arises when a single firm is the only supplier of a good for which no substitute exists
total cost
the sum cost of all the factors of production used in making goods
average cost of production
the sum cost of all the factors of production used in producing one unit of a good
mass production
the system using division of labor, standardized parts, and automatic conveyance
input
the total amount invested in the production of a good
output
the total amount of a good that is produced
tying contracts
these force a costumer to buy a certain product before he can buy the product he really wants
Sherman Act
this law made it a criminal offense to monopolize or restrain trade
natural monopoly
this occurs when a single firm can fill the demand for a good more efficiently than if there were multiple firms in the industry
monopolistic competition
type of competition in which each firm promotes a differentiated product
perfect competition
type of competition where there are a large number of independent sellers, buyers, is a standardized product, firms have free access to the market, market information is available
Federal Trade Commission
was created by an Act called by its name, a governmental agency whose purpose is to investigate trade practices
free trade
whenever there are no restrictions of penalties placed upon the trading of goods
