| A | B |
|---|
| Natural Monopoly | a market that runs most efficiently when one large firm supplies all of the output |
| A kind of monoply that the government supports | professional sports leagues |
| monopolistic competition | Many companies selling similar but not identical products. |
| Happens when a firm charges to much for a product | Consumers will substitue a rival's product |
| Deregulation | the removal of some governmental controls over a market. |
| Why do gov't's give monopoly powers by issuing patents? | The company can then profit without competition. |
| Perfect Competition | A market structure in which a large number of firms all produce the same product |
| Natural Monopoly | A market that runs most efficiently when one large firm supplies all the output. |
| Example of a deregulated industry. | Airlines |
| Oligopoly | A market structure in which a few large firms dominate a market. |
| Sherman Antitrust Act | outlawed mergers and monoplies that limit trade between states. |
| Not an example of a natural monopoly. | The diamond industry |
| Economies of Scale | Factors that cause a producer's average cost per unit to fall as output rises. |
| Ideal monopolist production level | Marginal cost = marginal revenue |
| Example of monopolistic competition. | Bookbag companies |
| Barrier to Entry | Any factor that makes it difficult for a new firm to enter a market. |
| Price Discrimination | division of customers into groups based on how much they will pay for a good. |
| Sole Proprietorship | A business owned and managed by a single individual |
| What percentage of businesses are sole proprietorships | 75% |
| General Partnership | Partnership in which partners share equally in both responsibility and liability. |
| Corporation | a legal entity owned by individual stockholders |
| Percenatge of businesses that are corporations. | 20% |
| Percenatge of all goods corporations sell. | 90% |
| Assets | Money and other valuables belonging to an individual or business. |
| Nonprofit organizations | Organizations that benefit society and operate like a business. |
| Publicly held corporation | Corporation that sells stock on the open market |
| Supply | the amount of goods available |
| Demand | the desire to own something and the ability to pay for it. |
| Purchasing Power | The amount of money consumers have to spend. |
| Income Effect | A change in price leads to an increase or decrease of purchasing power. |
| Substitution Effect | Taking a lower priced, but similar, product instead of the more expensive one. |
| The Demand Schedule | A table that lists the quantity of a good that a person will purchase at each price in a market. |
| The Demand Curve | Plots the information in a demand schedule that shows the relationship between the price of an item with the quantity demanded. |
| Elasticity of Demand | Extent to which a change in a goods price will affect the quantity consumers demand. |
| Inelastic Demand | your demand for a good that you will keep buying despite a price increase. |
| Elastic Demand | your demand for a good that you will not keep buying despite a price increase |
| Law of Supply | The higher the price, the larger the quantity produced. |
| Law of Demand | If the price goes up, then demand goes down. |
| The Supply Schedule | Shows the relationship between price and quantity supplied for a specific good. |
| Elasticity of Supply | A measure of the way suppliers respond to a change in price. |
| Inelastic Supply | If supply is not very responsive to changes in price, it is considered inelastic. |
| Elastic Supply | An elastic supply is very sensitive to changes in price. |
| Costs of Production | The marginal product of labor is the change in output from hiring one additional unit of labor, or worker. |
| Increasing marginal returns | occur when marginal production levels increase with new investment. |
| Diminishing marginal returns | occur when marginal production levels decrease with new investment. |
| Negative marginal returns | occur when the marginal product of labor becomes negative. |
| What Affects Elasticity of Supply? | Time |
