Market Structures and Competition

Flashcards covering key terms and concepts related to market structures and competition.

Perfect Competition

A market with many independent, well-informed buyers and sellers trading identical products.

Imperfect Competition

A market structure that does not meet all the conditions of perfect competition.

Monopolistic Competition

A market structure that has all the conditions of perfect competition except for identical products.

Product Differentiation

Real or imagined differences between competing products in the same industry.

Nonprice Competition

The use of advertising, giveaways, or other promotional campaigns to convince buyers that the product is better than another brand.

Oligopoly

A market structure in which a few very large sellers dominate the industry.

Collusion

A formal agreement to set prices or to behave cooperatively.

Price-fixing

Agreeing to charge the same or similar prices for a product.

Monopoly

A market structure with only one seller of a particular product.

Economies of Scale

A situation in which the average cost of production falls as the firm gets larger.

Externality

The unintended side effect that either benefits or harms a third party not involved in the activity that caused it.

Public Goods

Products that are collectively consumed by everyone and whose use by one individual does not diminish the satisfaction or value available to others.

Trusts

Legally formed combinations of corporations or companies.

Price Discrimination

The practice of charging customers different prices for the same product.

Cease and Desist Order

An FTC ruling requiring a company to stop an unfair business practice.

Public Disclosure

The requirement that businesses reveal information to the public.

Resource Immobility

When land, labor, or capital can’t easily move to where they’re needed most.

Modified Free Enterprise Economy

A mostly free market with some government intervention for regulations and public services.