1. Competition and Market Structures

2. Pure competition
Market structure in which a large number of firms all produce the same product and no single seller controls the supply or prices; also called perfect competition

3. commodity
A product, such as petroleum or milk that is considered the same no matter who produces or sells it

4. Any factor that makes it difficult for a new firm to enter a market
Barrier to entry
Any factor that makes it difficult for a new firm to enter a market

5. Imperfect competition
A market that fails to meet the conditions of pure competition

6. Start-up cost
The expenses a new business must pay before it can begin to produce and sell goods

7. A market in which a single seller dominates
monopoly
A market in which a single seller dominates

8. Economies of scale
Characteristics that cause a producer’s average cost per unit to drop as production rises

9. Natural monopoly
A market, that runs most efficiently when one large firm provides all of the production

10. A monopoly created by the government
Government monopoly
A monopoly created by the government

11. patent
A government license that gives the inventor of a new product the exclusive right to produce it and sell it

12. franchise
A contract that gives a single firm the right to sell its goods within an exclusive market

13. Price administration
The division of consumers into groups based on how much they will pay for a good

14. The ability of a company to control prices and total market output
Market power
The ability of a company to control prices and total market output

15. Monopolistic competition
A market structure in which many companies sell products that are similar but not identical

16. Making a product different from. Other similar products
differentiation
Making a product different from. Other similar products

17. Non-price competition
A way to attract through style, service, or locations, rather than a lower price

18. A market in which few large firms dominate the market
oligopoly
A market in which few large firms dominate the market

19. Price war
A series of competitive cuts that lowers the market price below the cost of production

20. collusion
An illegal agreement among firms to to divide the markets, set prices, or limit production

21. cartel
A formal organization of producers that agree to coordinate price and production

22. Predatory pricing
Selling a product below cost for a short period of time to drive competitors out of the market

23. Laws that encourage competition in the marketplace
Anti-trust Laws
Laws that encourage competition in the marketplace

24. When two or more companies join to form a single firm
merger
When two or more companies join to form a single firm

25. The removal of government control over a market
deregulation
The removal of government control over a market