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Unit Three
market structures, biz organization, etc
78
Economics
12th Grade
11/14/2011

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Term
perfect (pure) competition
Definition
compete to sell IDENTICAL products
Term
example of perfect competition
Definition
farmers produce is close to being identical
Term
4 conditions for perfect competition
Definition
1. many buyers&sellers act independently
2. sellers offer identical products
3. buyers are well informed
4. sellers can enter/exit market easily
Term
monopolistic competition
Definition
sell SIMILAR products to compete
Term
example of monopolistic competition
Definition
candy bar industry
Term
product differentiation & which competition it is present in
Definition
in monopolistic competition -- sellers compete by pointing out & MAGNIFYING small differences b/w their product & their competitors
Term
example of product differentiation
Definition
mcd vs burger king
Term
oligopoly
Definition
exist when there are only a FEW major competitors
Term
example of oligopoly
Definition
airlines, car manufacturers, soft drinks
Term
3 conditions for oligopoly
Definition
1. a FEW large sellers
2. sellers offer similar products
3. other sellers CANNOT easily enter/exit market
Term
tactics of monopolistic competitors & oligopolies
Definition
*non-price competition
*price leadership
*price war
*collusion
*cartel
Term
non-price competition
Definition
competing in ways NOT involving $ -- advertising, giveaways, store hours, customer service
Term
price leadership
Definition
a seller taking the lead by setting price of product
Term
price war
Definition
sellers aggressively undercut each other in an attempt to gain market share
Term
collusion
Definition
ILLEGAL -- sellers SECRETLY agree to set production levels or fix prices for their products
Term
cartel
Definition
LEGAL -- companies openly organize a system of price fixing & market sharing
Term
example of cartel
Definition
OPEC
Term
monopoly
Definition
1 seller controls all aspects of G/S
Term
what is a trust?
Definition
another name for monopoly
Term
3 conditions for monopoly
Definition
1. a single seller
2. no close substitutes
3. other sellers CANNOT easily enter/exit
Term
natural monopoly
Definition
market that runs most efficiently when 1 large firm produces all output
Term
example of natural monopoly
Definition
public water
Term
government monopoly
Definition
created by gov
Term
example of government monopoly
Definition
defense contracts are awarded to 1 FIRM -- preserves National Security
Term
technology monopoly
Definition
ex. copyright protections & patents
Term
how do we reward innovation
Definition
through technology monopolies
Term
barriers to entry in the market (2)
Definition
1. start-up costs
2. technology (may requre a high degree of tech know-how)
Term
economies of scale
Definition
factors that cause a producer's average cost per unit to fall as its output rises
Term
ex of economies of scale
Definition
mass-produced sneakers vs hand-made italian shoes
Term
oldest simplest most common type of business organization
Definition
sole proprietorship
Term
which business organization is usualloy seen in professional fields
Definition
partnerships
Term
which business organizationhas longetivity
Definition
corporation
Term
which business organization has an advantage of specialization (diff duties)
Definition
partnership
Term
which business organization has tax shelter
Definition
sole proprietorship
Term
corporation
Definition
a group of owners aka stockholders share in the profits & losses
Term
stockholder
Definition
a member of a group of owners of a corporation
Term
which business organization is heavily regulated by gov
Definition
corporation
Term
which business organization has double taxation
Definition
corporation
Term
merger
Definition
when 1 company joins/absorbs another
Term
horizontal merger
Definition
when 2 companies doing same thing join together
Term
ex of horizontal merger
Definition
delta & northwest
Term
vertical merger
Definition
when companies that produce diff PHASES of a product come together
Term
name of man who started vertical merger
Definition
andrew carnegie
Term
what did carnegie do with the ships
Definition
controlled steam industry with shipping lines, refineries, + iron mines
Term
franchise
Definition
biz owned separately but have same name (ex mcd)
Term
cooperative (co-op)
Definition
owned collectively by members
Term
non-profit organization
Definition
biz w/ goals other than profits (ex good will)
Term
the labor force
Definition
people age 16+ who are employed or ACTIVELY looking for work
Term
7 things you need to think about with the labor force
Definition
1. wages
2. skills
3. working conditions
4. location
5. intrinsic rewards (good feeling)
6. market trends
7. fringe benefits
Term
unskilled labor
Definition
HOURLY; no training
Term
semi-skilled labor
Definition
HOURLY; minimal training
Term
skilled
Definition
HOURLY; little supervision, specialized abilities
Term
professional
Definition
SALARY; advanced skills
Term
learning effect
Definition
education increases productivity = higher wage
Term
screening effect
Definition
completion of colege indicates endurance
Term
4 types of wage discrimination for women
Definition
1. "women's work"
2. human capital
3. career paths
4. glass ceiling
Term
minimum wage today
Definition
$7.25
Term
what happens to QD & prices when min wage increases
Definition
QD decreases; prices increase
Term
how often is unemployment rate measured
Definition
each month
Term
unemployment in a measure of _______
Definition
our economic health
Term
peak of unemployment rate
Definition
march 2010
Term
which minority has highest unemployment
Definition
black male
Term
F or M have higher unemployment
Definition
M
Term
who measures unemployment
Definition
bureau of labor statistics
Term
what is the numerical definition of unemployment rate
Definition
% of work force that is unemployed
Term
fraction for unemployment
Definition
# of unemployed / labor force
Term
3 conditions for employed
Definition
1. worked for pay for 1+ hours this week
2. worked w/o pay in a family biz for 15+ hours
3. have job but been absent due to illness etc
Term
2 conditions for unemployed
Definition
1. don't meet past 3 criteria
2. have been ACTIVELY looking for work during past 4 weeks
Term
4 types of unemployment
Definition
frictional, structural, seasonal, cylical
Term
frictional unemployment
Definition
results from people moving between jobs, and new workers entering the labour force
Term
structual unemployment
Definition
*workers skills do not match jobs available
*caused by change in technology, consumer preferences, & outsourcing
Term
seasonal unemployment
Definition
caused by economic slowdowns related to seasonal variations
Term
cyclical unemployment
Definition
results from economic DOWNTURNS in the biz cycle
Term
unemployment rate during great depression
Definition
25%
Term
3 levels of unemployment
Definition
1. full employment
2. underemployment
3. discouraged workers
Term
full employment
Definition
no cyclical unemp exist (but other categories do)
Term
underemployment
Definition
working @ a job which you are overqualified
Term
discouraged workers
Definition
have given up looking & do not appear in uemployment rate
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