Foundation
What is Economics
The study of how people make choices in an attempt to satisfy their unlimited wants with scarce resources.
What is a monopoly?
A market dominated by a single seller.
What is the law of demand?
The law of demand states that consumers buy more of a good when its price decreases.
What is a market?
A market is a physical or virtual space where sellers and buyers meet.
•Monopolistic competition is a market structure in which many companies sell similar but not identical products.
What is Scarcity
The condition that arises because society does not have enough resource to produce all things people would like to have
What is a natural monopoly?
A market where it runs most efficiently with one firm supplying all of the output.
What is the substitution effect?
When a consumer reacts to an increase in a good's price by buying less of that good and more of a similar yet cheaper good.
What is a perfect competition?
Where all the firms sell the same products
What is differentiation?
•Differentiation occurs when a good is produced slightly differently from another good.
What are the four types of goods
Consumer, Capital, durable and nondurable.
What does a patent do in the market?
When a demand curve shifts, what is the constant? What does not change?
Price
What is a barrier to entry?
Any condition that makes it difficult to enter a market.
What is an oligopoly?
•An oligopoly is a market in which a few large firms dominate a market.
What are the different types of economic systems?
Traditional, Command, Market, and Mixed
What is the difference between a vertical and horizontal monopoly?
A vertical monopoly has complete control from creation of the product to selling it while a horizontal monopoly indicates that an entire market was bought out.
What is the difference between a complemental good and a alternative.
Complemental is when you buy a product that works with another. Alternative is when you buy a product instead of another.
What is a commodity?
A product that is the same no matter who produces it.
What is a nonprice competition?
•Nonprice competition is using something other than price to attract customers.
What is the difference between opportunity cost and a trade off
Trade off is losing one thing in return for gaining another. Opportunity cost is the cost of something that you missed out on because you chose something else.
What are the factors that shift a demand curve?
Advertising, population, consumer taste, consumer expectations about future prices, and the price of complements and substitutes.
What are the four factors to make a perfect competition?
There are many buyers and sellers. Sellers offer identical products. Buyers and sellers are well-informed about their products. Sellers are able to enter and exit the market freely.