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25 terms

Chapter 6

STUDY
PLAY
perfect competition
an ideal market condition that includes a large number of sellers of identical goods and services and in which no one seller controls supply or prices.
buyers
someone who purchases or consumes a good or service.
sellers
the producer of a good or service.
monopoly
a market in which a single seller exercises exclusive or nearly exclusive control over a particular good or service.
monopolistic competition
a market in which many producers offer a similar-but not identical-good or service.
differentiate
to point out something that distinguishes an item from similar items; to make distinctions among similar things.
product differentiation
an attempt by a seller in monopolistic competition to convince buyers that its product is different from and superior to the nearly identical products of competitors.
nonprice competition
any attempt by a seller to attract customers from its competitors other than by lowering its prices.
oligopoly
a market in which a few large sellers control most of the production of a good or service.
interdependent pricing
the setting of prices in a manner responsive to-or dependent on-one's competitors.
price leadership
a situation in which one major seller in an industry sets a price and other sellers follow in order to remain competitive.
price war
a series of price reduction that may become so drastic that each seller involved suffers considerable losses.
collusion
an effort by producers or sellers of a particular product to secretly set production levels or prices.
cartel
group of producers or sellers of a certain good or service who unite to control prices, output, and market share.
natural monopolies
a market in which competition is inconvenient and impractical, and thus efficiency is best achieved by a single seller.
economies of scale
a condition in which, because of the level of resources needed, the cost of producing each unit of a product declines as the total number of units produced increases.
geographic monopolies
a market whose geographic area is so limited that a single seller can control an item's manufacture, sale, distribution, or price.
technological monopolies
a market that is dominated by a single producer because of new technology it has developed.
patent
a government document granting an inventor the right to produce, use, or sell an invention exclusively for a limited period of time.
copyrights
a government-granted right to exclusively duplicate, perform, display, publish, and sell copies of a literary, musical, or artistic work for a specified period of time.
government monopoly
a market in which a government is the sole producer or seller of a product.
trusts
a group of companies that combine to eliminate competition in an industry and thereby gain a monopoly.
laissez-faire
economic philosophy that opposes government intervention in the market.
antitrust legislation
federal and state laws that regulate big business and labor unions to prevent or dismantle monopolies.
price discrimination
the setting of different prices for different buyers under the same circumstances.