Economics Chapter 16-18 Vocab.

BA-110 w/ Perez

antitrust policy

Policy by which government attempts to prevent the acquisition and exercise of monopoly power and to encourage competition in the marketplace.

illegal per se

Actions taken by firms that are illegal in and of themselves without regard to the circumstances under which they occur.

rule of reason

Rule stating that whether or not a particular business practice is illegal depends on the circumstances surrounding the action.

horizontal merger

The consolidation of two or more producers of the same good or service.

vertical merger

Mergers between firms at different stages in the production and distribution of a product.

regulation

Government power to control the choices of private firms or individuals.

absolute advantage

Situation in which an economy or individual can produce more of any good per unit of labor than another country or individual.

terms of trade

The rate at which a country can trade domestic products for imported products.

one way trade

Situation in which countries specialize in producing the goods in which they have a comparative advantage and then export those goods so they can import the goods in which they do not have a comparative advantage.

two way trade

International trade in which countries both import and export the same or similar goods.

protectionist policy

Policy that restricts the importation of goods and services produced in foreign countries.

tariff

A tax on imported goods and services.

dumping

The practice of a foreign firm charging a price in other countries that is below the price it charges in its home country.

strategic trade policy

A policy aimed at promoting the development of key industries that may increase a countrys domestic well-being through trade with the rest of the world.

outsourcing

Situation in which firms in a developed country transfer some of their activities abroad in order to take advantage of lower labor costs in other countries.

pollution

Situation that exists when human activity produces a sufficient concentration of a substance in the environment to cause harm to people or to resources valued by people.