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Economics Chapter 7
Terms in this set (45)
A market structure in which a large number of firms all produce the same product.
A product that is the same no matter who produces it, such as petroleum, notebook paper, or milk.
Barrier to entry
Any factor that makes it difficult for a new firm to enter a market.
A market structure that does not meet the conditions of perfect competition.
The expenses a firm must pay before it can begin to produce and sell goods.
A market dominated by a single seller.
Economies of scale
Factors that cause a producer's average cost per unit to fall as output rises.
A market that runs most efficiently when one large firm supplies all of the output.
A monopoly created by the government.
A license that gives the inventor of a new product the exclusive right to sell it for a certain period of time.
The right to sell a good or service within an exclusive market.
A government issued right to operate a business.
Division of customers into groups based on how much they will pay for a good.
The ability of a company to change prices and output like a monopolist.
A market structure in which many companies sell products that are similar but not identical.
Making a product different from other similar products.
A way to attract customers through style, service, or location, but not a lower price.
A market structure in which a few large firms dominate a market.
A series of competitive price cuts that lowers the market price below the cost of production.
An agreement among firms to divide the market, set prices, or limit production.
An agreement among firms to charge one price for the same good.
A formal organization of producers that agree to coordinate prices and production.
Selling a product below cost to drive competitors out of the market.
Laws that encourage competition in the marketplace.
Like a cartel, an illegal grouping of companies that discourages competition.
Combination of two or more companies into a single firm.
The removal of some government controls over a market.
These monopolies can produce their product because of some geographic advantage.
The producer has a government issued patent to exclusively produce their invention for a specified number of years.
Market structure in which there is only one consumer. This consumer has monopolistic control.
Market structure in which there are only a few consumers. There are also many producers. The few consumers also usually purchase most or all of that product.
Acquiring control of a corporation, called a target, by stock purchase or exchange, either hostile or friendly. Also called takeover.
Laws passed in the United States, especially between 1890 and 1915, to prevent large business corporations, called trusts, from combining into monopolies to restrict competition. The laws were instituted to encourage free enterprise.
A group of laws and organizations designed to ensure the rights of consumers as well as fair trade, competition and accurate information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors.
Someone who has been given the right to sell a company's goods or services in a particular area. A person who has been granted a franchise.
One that grants the a franchise.
An attempt to take over a company without the approval of the company's board of directors.
Imposition of rules by government, backed by the use of penalties that are intended specifically to modify the economic behaviors of individuals and firms in the private sector.
Interstate Commerce Commission Act (1887)
The 1st federal law regulating the abuse of monopoly power. Bans unfair practices utilized by the railroad industry.
Sherman Antitrust Act (1890)
This federal law make it illegal to create or attempt to create a monopoly.
Clayton Antitrust Act (1914)
This federal law tries to prevent the creation of monopolies by defining specific illegal practices.
Federal Trade Commission Act (1914)
Federal law which creates a regulatory agency known as the federal trade commission. Gives this agency the responsibility of carrying out the provisions of the Clayton Act.
Robinson - Patman Act (1936)
Federal law which protects small retailers from unfair competition from chain stores and other large scale competitors.
Celler - Kefauver Act (1950)
Federal law which outlaws mergers or acquisitions which would lessen competition or create a monopoly.
Heart - Scott Rodino Antitrust Improvements Act (1976)
Like the C.K. Act it restricts mergers that will lessen competition. Requires that corporations notify the Justice department of pending mergers. Corporations need the approval of both of those federal entities in order for a merger to proceed.
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