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| A market situation in which a large number of firms produce similar but not identical produce similar but not identical products. Entry into the industry is relatively easy. |
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| The distinguish of products by brand name, color, and other minor attributes. Product differentiation occurs in other then perfectly competitive markets in which products are, in theory, homogeneous, such as wheat or corn. |
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| Advertising targeted at specific consumers, typically in the form of postal mailings, telephone calls, or e-mail messages. |
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| Advertising intended to reach as many consumers as possible, typically through television, newspaper, radio, or magazine ads. |
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| Advertising that permits a consumer to follow up directly by searching for more information and placing directly product order. |
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| A product with characteristics that enable an individual to evaluate the product's quality in advance of a product's quality in advance of a purchase. |
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| A product that an individual must consume before the product's quality can be established. |
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| A product with qualities that consumers lack the expertise to asses without assistance. |
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| Informational Advertising |
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| Advertising that emphasizes transmitting knowledge about the features of product. |
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| Advertising that is intended to induce a consumer to purchase a particular product and discover a previously unknown taste for the item. |
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| An item that is produced using information-intensive inputs at a relatively high fixed cost but distributed for sale at a relatively low marginal cost. |
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| Short-Run Economics of Operation |
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| A distinguishing characteristic of an information product arising from declining short-run average total cost as more units of the product are sold. |
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| A market structure in which there are vary few sellers. Each seller knows that the other sellers will react to its change in prices quantities, and qualities. |
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| The joining of a firm with another to which it sells an output or from which it buys an input. |
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| The joining of firms that are producing or selling similar product. |
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| The percentage of all sales contributed by the leading four or leading eight firms in an industry; sometimes called the industry concentration ratio. |
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| The manner on which one oligopolist reacts to change in price, output, or quality made by another oligopolist in the industry. |
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| A way of describing the various possible outcomes in any situation involving two or more interacting individuals when those individuals are aware of the interactive nature of their situation and plan accordingly. The plans made by these individuals are known as game strategies. |
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| A game in which the players explicitly cooperate to make themselves better off. As applied to firms, it involves companies colluding in order to make higher then perfectly competitive rates of return. |
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| A game in which the players neither negotiate nor cooperate in any way. As applied to firms in an industry, this is the common situation in which there are relatively few firms and each has some ability to change price. |
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| A game in which any gains within the group are exactly offset by equal losses by the end of the game. |
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| A game in which players as a group lose at the end of the game. |
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| A game in which players as a group are better off at the end of the game. |
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| Any rule that is used to make a choice, such as "always pick heads." |
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| Strategies that always yield the highest benefit. Regardless of what other players do, a dominant strategy will yield the most benefit for the player using it. |
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| Actions that focus solely on short-run gains because long-run benefits of cooperation are perceived to be smaller. |
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| Tit-for-tat Strategic Behavior |
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| In game theory, cooperation that continues as long as the other players continue to cooperate. |
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| A pricing campaign designed to capture additional market share by repeatedly additional market share by repeatedly cutting prices. |
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| Entry Deterrence Strategy |
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| Any strategy undertaken by firms in an industry, either individually or together, with the intent or effect of raising the cost of entry into the industry by a new firm. |
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| A model that hypothesizes that a group of colluding sellers will set the highest common price that they believe they can charge without new firms seeking to enter that industry in search of relatively high profits. |
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| A situation in which a consumer's willingness to purchase a good or service is influenced by how many other also buy or have bought the item. |
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| A tendency for a good or service to come into favor with additional consumers because other consumers have chosen to buy the item. |
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| A tendency for a good or service to fall out of favor with more consumers because other consumers have stopped purchasing the item. |
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| Cost-of-Service Regulation |
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| Regulation that allows prices to reflect only the actual average cost of production and no monopoly profits. |
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| Rate-of-Return Regulation |
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| Regulation that seek to keep the rate of return in an industry at a competitive level by not allowing prices that would produce economic profits. |
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| The potential for asymmetric information to bring about a general decline in product quality in an industry. |
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| Behavior on the part of a firm that allows it to comply with the latter of the law but violate the spirit, significantly lessening the law's effects. |
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| Share-the-gains, Share-the-pains Theory |
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| A theory of regulatory behavior that holds that regulators must take account of the demands of three groups: legislator, who established and oversee the regulatory agency; firms in the regulated industry; and consumers of the regulated industry's products. |
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| The percentage of a market that a particular firm supplies; used as the primary measure of monopoly power. |
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| Selling a product in slightly altered forms to different groups of consumers. |
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| Offering two or more products for sale as a set. |
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| Purchases of one product that are permitted by the seller only if the consumer buys another good by service from the same firm. |
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| Marginal Physical Product (MPP) of Labor |
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Definition
| The change in output resulting from the addition of one more worker. the MPP of the worker equals the change in total output accounted for by hiring the worker, holding all other factors of production constant. |
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| Marginal Revenue Product (MRP) |
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| The marginal physical product (MPP) times marginal revenue (MR). The MRP gives the additional revenue obtained from a one-unit change in labor input. |
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| Marginal Factor Cost (MFC) |
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Definition
| The cost of using an additional unit of input. For example, if a firm can hire all the workers it wants at the going wage rate, the marginal factor cost of labor is the wage rate. |
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| Input factor demand derived from demand from the final product being produced. |
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| A firm's employment of labor outside the country in which the firm is located. |
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| Worker organization that seeks to secure economic improvements for their members; they also seek to improve the safety, health, and other benefits (such as job security) of their members. |
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| Labor unions composed of workers who engage in a particular trade of skill, such as baking, carpentry, or plumbing. |
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| Negotiation between the management of a company or of a group of company or of a group of companies and the management of a union of a group of unions for the purpose of reaching a mutually agreeable contract that sets wages, fringe benefits, and working conditions for all employees in all the unions involved. |
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| Labor union that consist of workers from a particular industry, such as automobile manufacturing or steel manufacturing. |
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| Laws that make it illegal to require union membership as a condition of continuing employment in a particular firm. |
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| A business enterprise in which employees must belong to the union before they can be hired and must remain in the union after they are hired. |
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| A business enterprise in which employees must belong to the union before they can be hired and must remain in the union by some specified date after employment begins. |
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| A disagreement involving two or more unions over which should have control of a particular jurisdiction, such as a particular craft or skill or a particular firm or industry. |
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| A work stoppage by a union in sympathy with another union's strike or cause. |
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| A refuse to deal with companies or purchase products sold by companies that re dealing with a company being struck. |
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| Any practice that forces employers to use more labor then they would otherwise or to use existing labor in an inefficient manner. |
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