| A | B |
|---|
| perfect competition | a market structure in which a large number of firms all produce the same product |
| commodity | 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 |
| imperfect competition | a market structure that does not meet the conditions of perfect competition |
| start-up-costs | the expenses a firm must pay before it can begin to produce and sell goods |
| monopoly | a market dominated by a single seller |
| economics of scale | factors that cause a producer's average cost per unit to fall as output rises |
| natural monopoly | a market that runs most efficiently when one large firm supplies all of the output |
| government monopoly | a monopoly created by the government |
| patent | a license that gives the inventor of a new product the exclusive right to sell it for a certain period of time |
| franchise | the right to sell a good or service within an exclusive market |
| license | a government-issued right to operate a business |
| price discrimination | division of customers into groups based on how much they will pay for a good |
| market power | the ability of a company to change prices and output like a monopolist |
| monopolistic competition | a market structure in which many companies sell products that are similar but not identical |
| differentiation | making a product different from other similar products |
| nonprice competition | a way to attract customers through style, service, or location, but not a lower price |
| oligopoly | a market structure in which a few large firms dominate a market |
| price war | a series of competitive price cuts that lowers the market price below the cost of production |
| collusion | an agreement among firms to divide the market, set prices, or limit production |
| price fixing | an agreement among firms to charge one price for the same good |
| cartel | a formal organization of producers that agree to coordinate prices and production |
| predatory pricing | selling a product below cost to drive competitors out of the market |
| antitrust laws | laws that encourage competition in the marketplace |
| trust | like a cartel, an illegal grouping of companies that diccourages competition |
| merger | combination of two or more companies into a single firm |
| deregulation | the removal of some government controls over a market |
