Econ 3

market structure
the extent to which competition prevails in particular markets
perfect competition
market situation in which there are numerous buyers and sellers, and no single buyer or seller can affect price
How does perfect competition benefit society?
forcing prices down to one that just covers the costs of production plus a small profit. It helps consumers pay correct price and they yield economic efficiency
In a perfect competitive market structure, how much control does a single seller have over market price?
The workings of supply and demand, rather than a single seller control the price. Equilibrium price
What is the relationship among the types of products that sellers sell in a perfect competitive market?
The sellers need to be producing similar or same products as one another
Monopoly
market situation in which a single supplier makes upon entire industry for a good or service with no close substitutions
barriers to entry
obstacles to competition that prevent others from entering a market
economies of scale
low producing costs resulting from large size of output
patent
exclusive right to make, use, or sell an invention for a specified number of years
copyright
exclusive right to sell, publish, or reproduce creative works for a specified number of years
oligopoly
industry dominated by a few suppliers who exercise some control over price
product differentiation
manufacturers use of minor differences in quality and features to try to differentiate between similar goods and services
cartel
arrangement among groups of industrial businesses to reduce international competition by controlling the price , production, and distribution of goods
monopolistic competition
market situation in which a large number of sellers offer similar but slightly different products and in which each has some control over price
What are 4 characteristics of pure monopoly?
1. a singular seller
2. no substitutions
3. Barriers to entry
4. Almost complete control of market price
What are 3 types of market structures with imperfect competition
1. Monopoly
2. Oligopoly
3. monopolistic competition
What is the difference between a geographic monopoly and a technological monopoly?
A geographic monopoly for example, is a store se in a rural area, because of this, the potential for profits are small, and no other businesses wants to enter their market.
There cloud be a technological monopoly over an invention for example. A government patent can give you exclusive rights to manufacture, rent, or sell your product. In addition, copyright protects art, literature, song lyrics, and other creative works
In a monopolistic competition, how many sellers are there?
A single seller
Interlocking directorate
a board of directors, the majority of whose members also serve as the board of directors of a competing cooperation
antitrust legislation
federal and state law passed to prevent new monopolies from forming and to break up those that already exist
merger
the legal combination of two more companies that become one corporation
conglomerate
large corporation made up of smaller corporations dealing in unrelated businesses
deregulation
reduction of government regulation and control over business activities
What is the difference between a horizontal merger and a vertical merger?
A horizontal merger involves businesses tha make the same product and provide the same service, while a vertical merger takes place when 2 firms in different steps of manufacturing come together
What two methods does the federal government use to keep business competitive?
Antitrust laws and direct regulations of busies pricing and product quality
financing
obtaining funds or money capital for a business expansion
Cost-benefit analysis
a financial process in which a business estimates the cost of any action and compares it with the estimated benefits of the action
revenues
total income from sales of output
profits
the amount earned after a business subtracts its costs from its revenues
Why are people willing to finance business investments?
They are seeking reward, interest earned on savings account
How does competition for financing determine how resources are allocated in the market economy?
The business that people deem more profitable are the ones that get the resources
debt financing
raising funds for a business through borrowing
short-term financing
funds borrowed by a business for any period of time less than a year
intermediate-term financing
funds borrowed by a business for 1 to 10 years
long-term financing
funds borrowed by a business for a period of more than 10 years of funds raised by issuing stock
What are three general types of debt financing?
short term, intermediate term, and long term financing
What type of financing is issuing stock considered as?
equity financing because part of the ownership, or equity, of the company is being sold
Do holders of common stock have any right in a cooperation?
holders of common stock have the right to vote in company elections, and financial managers have to gain in approval of the owners of common stock
production
process of changing resources into goods that satisfy the needs and wants of individuals an businesses
consumer goods
goods produced for individuals and sold directly to the public to be used as they are
mechanization
combined labor of people and machines
assembly line
production system in which the goods being produced moves on a conveyer belt past workers who reform individual tasks in assemble it
division of labor
the breaking down of a job into small tasks preformed and people oversee them
automation
production process in which machines do the work and people oversee them
robotics
sophisticated computer controlled machinery that operates and assembly line
What are the most important steps in the production process?
planning, purchasing, quality control, and inventory control
what does assembly line production require?
An assembly line requires workers or machines who specialize in a certain part of the line. It is also only possible with interchangeable parts in standardized sizes
marketing
all the activities needed to generate consumer demands and to move goods and services from the producer to the consumer
consumer sovereignty
the role of the consumer as ruler of the market when determining the types of goods and services produced
utility
the amount of satisfaction one gets from a good or service
market research
gathering, recording, and analyzing data about the types of goods and services that people want
market survey
information gathered by researchers about possible users of a product based on such characteristics as age, gender, education, income, and geographical origin
test-marketing
offering a product for sale in a small area for a limited period of time to see how well it sells before offering it nationaly
What steps are involved in market research?
gather record and analysis of data. They send out questioners and test new products in certain locations
what is the relationship between marketing and utilities?
marketing makes the consumer feel like having this would ad to their satisfaction, aka, utility
price leadership
a practice in some industries in which the largest firm publishes its price list ahead of its competition, who then match those announced prices
penetration pricing
selling a new product at a low price to attract customers away from an established product
promotion
use of advertising to inform consumers that a new or improved or service is available and to persuade them to purchase it
direct-mail advertising
type of promotion using a jailer that usually includes a letter describing the product or service and an order bank or application form
product life cycle
scene of stages that a product goes though from first introduction to complete withdrawal from the market
What two marketing strategies depend on price?
penetration price and price leadership
channels of distribution
routes by which goods are moved from producers to consumers
wholesalers
businesses that purchase large quantities of goods from producers for resale to other businesses
retailers
businesses that sell consumer goods directly to the public
e-commerce
business transactions conducted over the internet
What is the difference between retailers and wholesalers?
retailers are businesses that sell goods directly to the public, while wholesalers purchase large quantities of goods from other producers and sell them to other businesses
civilian labor force
total number of people 16 years or older who are either employee or actively seeking work
blue-collar workers
category of workers employed in crafts, manufacturing, and confirm labor
white-collar workers
category of workers employed in offices, sales, or professional positions
service workers
people who provide services directly to individuals
unskilled workers
people whose job requires no special training
semiskilled workers
people whose jobs require some training often using modern technology
skilled workers
people who have leaned a trade or craft either through a vocational school, or an apprenticeship to an experienced worker
professionals
highly educated individuals with college degrees and usually additional education or training
minimun wage law
federal law that sets the lowest legal hourly wage rate that maybe paid to a certain type of workers
what is the difference between blue-collar and white-collar workers?
blue-collar workers are employed in crafts, manufacturing , or confirm laborers, while white-collar workers are employed in offices, sales, or professional positions
labor union
association of workers organized to improve wages and working conditions for its members
strike
deliberate work stoppage by workers to force an employer to give in to their demands
craft union
union made up of skilled workers in a specific trade or industry
industrial union
union made up of all workers in an industry regardless of job skill level
closed shop
company in which only union members could be hired
local union
members of a union in a particular factory, company, or geographic area
union shop
company that requires new employee to join after a specific period of time
agency shop
companys in which employed are not required to join the union, but must pay union dues
right to work laws
state laws forbidding unions from forcing workers to join and pay union dues
what are the major kinds of labor unions?
the craft union and the industrial union
collective barganing
process by which unions and employers negotiate the conditions of employment
cost of living adjustment ( COLA)
provision calling for a wage increase each year if the general level of prices rises
mediation
a neutral person tries to get both sides to reach an agreement during negotiations
arbitration
union and management submit the issues they cannot agree on to a third party for final decisions
picketing
action of stickers who walk in front of a workplace carrying signs that state there disagreement with the company
boycotting
economic pressure exerted by unions urging the public not to purchase the goods or services produced by a company
lockout
situation that occurs when management prevents workers from returning to work until they agree to a new contract
injunction
court order preventing some activity
what do union workers do when they go on strike
picketing or boycotting