Return of the Term-inator
the quality of producing effectively with a minimum of waste
efficiency
the total amount invested in the production of a good
input
revolutionized mass production
Henry Ford
large number of sellers and buyers, standardized product, free access to market, market information available to all parties
perfect competition
three basic components of mass production
division of labor, standardized parts, automatic conveyance
forces buyers into buying products they do not want in order to acquire ones that they do want
tying contract
what a good is worth, based on scarcity and utility
value
gunpower entrepreneur
E.I. du Pont
large number of firms, differentiated products, easy access to market
monopolistic competition
when the price of a good is set below the equilibrium, resulting in a shortage; example: rent control
price ceiling
these are formed by a group of businesses to eliminate competition
trusts
sum cost of all the factors of production used in making goods
total cost
solved the Diamond-Water Paradox
Karl Menger
single seller, product has no substitutes, market entry is blocked
monopoly
when the price of a good is set above the equilibrium, resulting in a surplus; example: minimum wage
price floor
the amount of satisfaction that results from a one-unit increase of a good
marginal utility
sum cost of all the factors of production used in making a single good
average cost
proponent of comparative advantage
dominated by a few firms, product can be standardized or differentiated, significant barriers to market entry
oligopoly
the ability of one entity to produce goods or provide services more efficiently than his competitors when given the same resources
absolute advantage
international exchange of goods in the absence of governmental tariffs, quotas, or other prohibitive regulations
free trade
the production of goods in which a region has absolute or comparative advantage
geographic specialization
wrote Physiocracy
Pierre Samuel du Pont de Nemours
when there is only one firm in an industry because it can fill the demand for a good more efficiently that if there were multiple firms
natural monopoly
the ability of an entity to produce goods or provide services at an opportunity cost that is lower than that of another producer
comparative advantage