Microecon Unit 2

Chapter 24

1. Monopoly – A market structure characterized by (1) a single seller of a well-defined product for which there are no good substitutes and (2) high barriers to entry.

2. Oligopoly – A market structure in which a small number of sellers compose (basically) the entire industry; there is competition among the few.

3. Cartel – An organization of sellers designed to coordinate supply decisions to maximize the joint profits of its members.

4. Collusion – An agreement among firms to avoid various competitive practices, particularly price reductions.

Chapter 25

5. Resource Markets – Places or ways in which business firms who demand factors of production can get together with household suppliers of those factors.

6. Human Capital – Any training, education, skill or health an individual has that determines their production possibilities.

7. Marginal Revenue Product – The change in the total revenue of a firm that results from the employment of an additional unit of a resource.

8. Resource Mobility – The ease with which factors of production are able to move among alternative uses.

Chapter 26

9. Fringe Benefits – Items of value other than wages and salaries that are paid for by an employer in exchange for labor services.

10. Real Earnings – Incomes of workers that have been adjusted for differences in the general level of prices across time or geographic areas.

11. Employment Discrimination – Unequal treatment of persons in the workplace on the basis of their race, sex, religion, or national origin.

12. Automation – A production technique that reduces the amount of labor required to produce a good or service by increasing the use of physical capital.

Chapter 27

13. Capital – Produced resources that can be used to produce future goods or services.

14. Saving – Current income that is not spent on consumption.

15. Inflation Premium – The component of a money (nominal) interest rate that reflects compensation to the lender for an expected increase in the general price level.

16. Positive Rate of Time Preference – The desire to consume now, rather than at some point in the future.

17. Real Interest Rate – The money (nominal) interest rate adjusted for changes in the general price level.

18. Entrepreneur – A person who introduces new products or improved technologies and decides which projects to undertake in the free market.

Chapter 28

19. Income Mobility – The movement of individuals or families up or down income distribution rankings when comparisons are made at different points in time.

20. Poverty Level – The amount of money income below which a family is considered to be “poor”, based upon their family size and composition.

21. Samaritan’s Dilemma – The conflict a person can have between transferring income to the poor and discouraging behavior that increases the incidence of poverty.

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