Economics Unit 3 Vocab

Market Structure

The interconnected characteristics of a market, such as the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition, extent of product differentiation, and ease of entry into and exit from the

Perfect Compitition

The situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers.

Invisible Hand of the Market

Conceived by Adam Smith to describe the self-regulating behavior of the marketplace.

Monopoly

The exclusive possession or control of the supply or trade in a commodity or service.
A company or group having exclusive control over a commodity or service.
EX. electricity, gas, and water

Oligopoly

A state of limited competition, in which a market is shared by a small number of producers or sellers.

Monopolistic Competition

A type of imperfect competition such that many producers sell products that are differentiated from one another as goods but not perfect substitutes (such as from branding, quality, or location).
A firm takes the prices charged by its rivals as given and

Nonprice Competition

Marketing strategy.
The firm can also distinguish its product offering through quality of service, extensive distribution, customer focus, or any other sustainable competitive advantage than price.

Sole Proprietorship

A type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business.
The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility

Partnership

A business or firm owned and run by two or more partners.
A position as one of the partners in a business or firm.

Corporation

A company or group of people authorized to act as a single entity (legally a person) and recognized as such in law.

Laissez-faire

A policy or attitude of letting things take their own course, without interfering.

Regulation

The action or process of regulating or being regulated.
"the regulation of financial markets".

Market Failure

A concept within economic theory describing when the allocation of goods and services by a free market is not efficient. That is, there exists another conceivable outcome where a market participant may be made better-off without making someone else worse-

Collusion

A secret or illegal cooperation or conspiracy, esp. in order to cheat or deceive others.
"the armed forces were working in collusion with drug traffickers".

Tragedy of the Commons

The depletion of a shared resource by individuals, acting independently and rationally according to each one's self-interest, despite their understanding that depleting the common resource is contrary to the group's long-term best interests.

Negative (Positive) Externality

Occurs when a product or decision costs the society more than its private cost. It is generally viewed as a failure of the market because the level of consumption or production of the product is higher than what the society requires.
Car pollution is an e

Public Goods

A commodity or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

Free Riders

Refers to someone who benefits from resources, goods, or services without paying for the cost of the benefit.

Economies of Scale (?)

A proportionate saving in costs gained by an increased level of production.