Chapter 14 Market Structure and Degrees of Market Power

Vocabulary flashcards on key concepts related to market structure and market power.

Market Power

The extent to which a seller can charge a higher price without losing many sales to competing businesses.

Perfect Competition

A market structure where all businesses sell identical goods with many buyers and sellers, resulting in no market power.

Monopoly

A market structure characterized by a single seller who has significant market power and can set prices without competition.

Oligopoly

A market structure where a few large sellers dominate the market, allowing for substantial market power.

Monopolistic Competition

A market structure with many small businesses selling differentiated products, allowing for some market power.

Price-taker

A firm that must accept the prevailing prices in the market and cannot influence market prices.

Barriers to Entry

Obstacles that prevent new competitors from easily entering an industry or area of business.

Product Differentiation

Efforts made by sellers to distinguish their products from those of competitors through various features.

Demand Curve

A graph showing the relationship between the price of a product and the quantity demanded by consumers.

Marginal Revenue

The additional revenue gained from selling one more unit of a product.

Antitrust Policy

Laws and regulations aimed to promote competition and prevent monopolistic practices.

Market Failure

A situation in which the allocation of goods and services is not efficient, often due to market power.

Predatory Pricing

Setting prices extremely low in order to eliminate competition, with the intent to raise prices thereafter.

Natural Monopoly

A market where a single seller provides goods or services more efficiently than multiple competing sellers would.

Price Ceiling

A government-imposed limit on the price charged for a product, intended to make it more affordable.

Economic Surplus

The difference between what consumers are willing to pay for a good or service and the price they actually pay.