Economics

20 terms by ResourceCenter 

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monopoly

a market in which there are many buyers but only one seller

Collusion

Rival firms working together for their own benefit... illegal in most countries!

Oligopoly

a market in which control over the supply of a commodity is in the hands of a small number of producers and each one can influence prices and affect competitors

Monopolistic Competition

a market structure in which many companies sell products that are similar but not identical

Perfect Competition

a market structure in which a large number of firms all produce the same product

Patent

A government license that gives the holder exclusive rights to a process, design or new invention for a designated period of time.

Regulation

government intervention in a market that affects the production of a good

Tragedy of the commons

Situation in which people acting individually and in their own interest use up commonly available but limited resources, creating disaster for the entire community

Public Goods

Goods that are neither excludable nor rival in consumption

Market Power

the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices

Transaction Costs

The costs that parties incur in the process of agreeing to and following through on a bargain

Externality

an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume

Information Asymmetry

situation in which the relative bargaining power of two parties in a transaction is determined by one party in the transaction possessing more information essential to the transaction than the other party

Laffer Curve

a graph purporting to show the relation between tax rates and government income

Investment

the act of redirecting resources from being consumed today so that they may create benefits in the future; the use of assets to earn income or profit

Consumption

the utilization of economic goods to satisfy needs or in manufacturing

Helping Hand

A way of solving market failures specifically through providing public goods that the private sector won't provide, dealing with externalities associated with private sector activity, preventing natural monopolies from emerging, limiting information asymmetries and the problems that can result from this, and promoting equality.

Grabbing Hand

A theory assumes that governments are rational and self-interested. They are chiefly concerned with winning power, exercising power, and hanging on to power. The state will nationalize firms to appropriate their own rents instead of private individual rents. All rules and the overall behavior of the state is constructed to maximize rent generation. But the grabbing hand is not just for dictators. In democracies, politicians redistribute income to groups that elect them which leads to expansion of the public sector and decline in private investment. Grabbing hand is not successful in the long run while helping hand is.

Corruption

inducement (as of a public official) by improper means (as bribery) to violate duty (as by commiting a felony)

Crony Capitalism

A system in which close friends of a political leader are either legally or illegally given business advantages in return for their political support.

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