Exploring Economics: Modules 23–25 (Monopoly, Oligopoly, Monopolistic Competition, and Regulating Market Power)

Vocabulary flashcards covering market structures, monopoly, oligopoly, monopolistic competition, and regulatory antitrust policies from Chapter 8 (Modules 23–25).

Market Structure

The framework that describes the nature of competition within a market.

Product Market

A market for a good that includes all those products that consumers consider to be close substitutes for that good.

Imperfect Competition

A market condition that arises when there is not enough competition among firms to prevent individual firms from raising their price above the equilibrium level determined by supply and demand.

Market Power

The ability of a firm to change the market price of a good or service.

Monopoly

A product market served by only one firm that can earn continual profit if competitors have difficulty entering the market.

Monopolist

The single supplier operating within a monopoly market.

Barriers to Entry

Obstacles that prevent new firms from entering particular markets.

Natural Monopoly

A market in which high startup costs make it prohibitively expensive for more than one firm to operate, such that the average cost of production declines as output rises.

Average Cost

The total cost of production divided by the quantity of output.

Economies of Scale

A condition that exists if, in the long run, an increase in output results in a decrease in average cost.

Reservation Price

The highest price a consumer is willing to pay to own one more unit of a product.

Price Discrimination

The practice of charging different customers different prices for the exact same good.

Oligopoly

A market structure characterized by a small number of firms.

Oligopolist

A firm that operates within an oligopoly industry.

Collusion

A situation where oligopolistic firms work together to limit competition, reduce output, and increase profits.

Cartel

A group of firms that formally agree to work together and act like a monopoly.

Monopolistic Competition

A market structure in which many firms supply similar but not identical goods.

Differentiated Products

Goods and services that differ somewhat from other competitive products in the same market.

Price Controls

Government policies that directly set or limit the prices charged in an industry.

Antitrust Policy

A set of laws designed to promote competition in the marketplace by limiting non-competitive actions, price-fixing, and predatory acts.