(10 points) Online Quiz for Unit Two Vocabulary (Quizlet): http://quizlet.com/71285636/economics-unit-2-vocabulary-flash-cards/
(10 points) Unit Two Vocabulary Definitions & Original Examples:
Demand - Consumer's desire and willingness to pay a price for a specific good or service
Example: Paying 20 dollars for a toy at target
Law of Demand - States that all factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, vice versa
Example: A popular artist dies and, thus, he obviously will be producing no more art. Demand for his art increases substantially as people want to purchase the few pieces that exist.
Substitution Effect - Idea that as prices rise (or incomes decrease) consumers will replace more expensive items with less costly alternatives
Example: Buying a cheaper version of cheese its, instead of the cheese it brand
Income Effect - Change in an individual's or economy's income and how the change will impact the quantity demanded of a good or service
Example:If the price of meat increases, then the higher price may encourage consumers to switch to alternative food sources, such as buying vegetables.
Demand Schedule - Table of the quantity demanded of a good at different price levels
Market Demand Schedule - Table that lists the quantity of a good all consumers in a market will buy at every different price
Demand Curve - Graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price
Determinants of Demand - -Price
-Taste and Preference of individual/household
-Expectations of future prices
-Surrounding circumstances (weather, climate)
Example: You might buy a video game later knowing that it will be cheaper
Ceteris Paribus - "all other things remaining equal"
Example: rule out the possibility of 'other' factors changing, i.e. the specific causal relation between two variables is focused.
Normal Good - Any items for which demand increases when income increases
Example: Nike or Adidas shoes would be a normal good. As you make more money you are likely to move from off-brand shoes to nicer quality tennis shoes.
Inferior Good - A type of good for which demand declines as the level of income or real GDP in the economy increase
Example: when your income was lower, you bought Save Well ketchup because this brand was cheap and got the job done.
Complementary Goods - When a good's demand is increased when the price of another good is decreased
Example: Going to Best Buy to buy a computer, and than realizing you need to Microsoft Word Software as well so you buy both.
Substitute Goods - When a good's demand is increased when the price of another good is increased
Example: Pepsi verse Coke
Elasticity of Demand - -Show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price, ceteris paribus
Example: if the price of a can of coke goes up from $0.50 to $1 and income stays the same, the income that is available to spend on coke, which is $2, is now enough for only two rather than four cans of coke.
Inelastic Demand - When the price goes up, consumers' buying habits stay about the same, and when the price goes down, consumers' buying habits also remain unchanged
Example: As the price of gasoline increases, the quantity demanded doesn't decrease all that much
Elastic Demand - Type of demand that will rise or fall depending on the price of the good
Example: Candy bars
Unitary Elastic Demand - When the percentage change in quantity demanded is equal to the percentage change in price
Example: Clothing; Decreases in price of the supply, whether from a sale or discount store, often creates an approximately equal increase in demand.
Total Revenue vs. Total Profits - In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments
Example: Your paycheck before the deduction of taxes
Supply - Amount of a product that producers and firms are willing to sell at a given price when all other factors being held constant
Example: The amount of toys Toys R Us is willing to sell
Law of Supply - A microeconomic law that states, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa
Example: There is a drought and very few strawberries are available. More people want the strawberries than there are berries available. The price of strawberries increases dramatically.
Quantity Supplied - Quantity of a commodity that producers are willing to sell at a particular price at a particular point of time
Example: The price of a toy over time
Supply Schedule - Table which shows how much one or more firms will be willing to supply at particular prices under the existing circumstances
Example:
75 cents - 470 oranges a week
70 cents - 400 oranges a week
65 cents - 320 oranges a week
60 cents - 200 oranges a week
Variable - Any measurement that helps to determine how an economy functions
Example: Raw material
Elasticity of Supply - The measure of the responsiveness in quantity supplied (QS) to a change in price for a specific good (% Change QS / % Change in Price).
Example: Assume when pizza prices rise 40%, the quantity of pizzas supplied rises by 26%.(.40*.26)
Increasing Marginal Returns - As the number of new employees increases, the marginal product of an additional employee will at some point be less than the marginal product of the previous employee
Example: Suppose that Flex-Star Plaque Company produces the wildly popular Flex-Star Interactive Trophy Plaque
Diminishing Marginal Returns - As the number of new employees increases, the marginal product of an additional employee will at some point be less than the marginal product of the previous employee
Example: Labor forces, cant be too high cause than you are paying employees more money than company is making
Fixed Cost vs. Variable Cost - Fixed: expenses that have to be paid by a company, independent of any business activity
Example: Variable: expense that varies with production output
Total Cost - Costs incurred in producing something or engaging in an activity, made up of variable costs and fixed costs
Example: The cost it made to produce a certain toy
Marginal Cost - Change in total cost that comes from making or producing one additional item
Example: Producing additional vehicles requires building a new factory, the marginal cost of the extra vehicles includes the cost of the new factory.
Marginal Revenue - The increase in revenue that results from the sale of one additional unit of output. (Change in Total Revenue/Change in Output Quantity)
Example: a company producing brooms has a total revenue of $0, when it doesn't produce any output. The revenue it sees from producing its first broom is $15, bringing marginal revenue to $15 ($15 in total revenue/1 unit of product). If the revenue from the second broom is $10, the marginal revenue gained by producing the second broom is $10 (change in total revenue: $25-$15/1 additional unit).
Operating Cost - Expenses which are related to the operation of a business, or to the operation of a device, component, piece of equipment or facility; the cost of resources used by an organization just to maintain its existence
Example: Bank fees
Subsidies - A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction; usually given to remove some type of burden and is often considered to be in the interest of the public
Example: Government gives some money to help reduce the price. like going to university is expensive, but the federal government pays 50 percent of it so its some what affordable.
Excise Tax - Taxes paid when purchases are made on a specific good, such as gasoline
Example:Buying food at target and getting tax added on to the final total
Regulations - Intervene directly in market decisions such as pricing, competition, market entry, or exit.
Example: Wages, pollution effects
Cost of Production - Cost incurred by a business when manufacturing a good or producing a service. Production costs combine raw material and labor
Example: Fuel, raw material, and some labor prices
Marginal Product of Labor - The change in output that results from employing an added unit of labor
Example: Hiring more employees
Equilibrium price: the price at which the quantity of a product offered is equal to the quantity of the product in demand
Example: this market will be in equilibrium at a price of 60p per soft drink. At this price the demand for drinks by students equals the supply, and the market will clear. 500 drinks will be offered for sale at 60p and 500 will be bought - there will be no excess demand or supply at 60p.
Disequilibrium price: A cost of obtaining a product that creates unbalance in the market by not equating the quantity of the product demanded and the quantity of the product supplied.
Example: if the cost of obtaining a product is too high, the quantity of the product supplied will exceed the quantity demanded.
Excess demand: a situation in which the market demand for a commodity is greater than its market supply, thus causing its market price to rise
Example: excess supply in the labor market
Excess supply: a situation in which the market supply of a commodity is greater than the market demand for it, thus causing its market price to fall
Example: Disequilibrium
Price ceilings: are regulations designed to protect low-income individuals from not being able to afford important resources.
Example: Gotham City sets a price ceiling of $1,000 for a one bedroom apartment, where landlords cannot legally charge higher than that rate. But depending on the market demand for apartments, this price ceiling could hinder supply and create inefficiencies and shortages in the market.
Rent control: government control and regulation of the amounts charged for rented housing
Example: In Ontario the Residential Tenancies Act 2006
Price floor: is a situation when the price charged is more than or less than the equilibrium price determined by market forces of demand and supply.
Example: Minimum wage laws
Minimum wage: the lowest wage permitted by law or by a special agreement
Example: Getting paid $8.50 an hour for working at McDonalds
Surplus: an amount of something left over when requirements have been met; an excess of production or supply over demand.
the price of coffee is $7/pound. If sellers are prepared to sell 100 tons at this price but buyers are only prepared to buy 80 tons, then there is a 20 ton surplus of coffee.
Shortage: a state or situation in which something needed cannot be obtained in sufficient amounts.
Example: if you go to the store to buy a specific item, and the item is not at the store for sell
Search Costs: is one facet of transaction costs or switching costs
Example: when going to a store to buy shampoo, and you are confronted with an assortment of products in the shampoo area
Role of Prices: The price of goods plays a crucial role in determining an efficient distribution of resources in a market system.
Example: Price for a doll has to be fair and efficient
Supply Shock: is an event that suddenly changes the price of a commodity or service.
Example: an unexpected increase in the world supply of oil leads to an increase in real GDP and falling prices for gasoline in the town of Chanhassen
Rationing: allow each person to have only a fixed amount of (a particular commodity).
Example: a rise in the market price of 'smart' phones sends a signal to potential manufacturers to enter this market, and perhaps leave another one.
Black Market: an illegal traffic or trade in officially controlled or scarce commodities
Example: buying or selling illegal drugs
Spillover Costs: also known as "negative externality," is a term used to describe some loss or damage that a market transaction causes a third party.
Example: All children must be vaccinated so they don’t spread a disease
Perfect Competition: 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.
Example: Caribou vs Starbucks
Commodity: a raw material or primary agricultural product that can be bought and sold,
Example: Copper or coffee.
Barrier to Entry: are obstacles that make it difficult to enter a given market.
Example: Money, target market
Imperfect Competition: the situation prevailing in a market in which elements of monopoly allow individual producers or consumers to exercise some control over market prices
Example: Monopolistic, monopsony
Monopoly: the exclusive possession or control of the supply or trade in a commodity or service.
Example: Water supplied by local public utility
Economies of Scale: a proportionate saving in costs gained by an increased level of production.
Example: Buying in bulks, and high fixed costs
Natural Monopoly: is a monopoly in an industry in which it is most efficient (involving the lowest long-run average cost) for production to be permanently concentrated in a single firm rather than contested competitively.
Example: Utilities industry
Government Monopoly: is a form of coercive monopoly in which a government agency or government corporation is the sole provider of a particular good or service and competition is prohibited by law.
Example: US Postal Service
Patent: a government authority or license conferring a right or title for a set period, especially the sole right to exclude others from making, using, or selling an invention.
Example: Technical solutions and simple clever ideas
Franchise: an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities
Example: A & W Restaurants
License: a permit from an authority to own or use something, do a particular thing, or carry on a trade
Example: Drivers license, hunting license
Price Discrimination: the action of selling the same product at different prices to different buyers, in order to maximize sales and profits.
Example: Selling a pair of shorts for $10 and another pair for $20
Market Power: is the ability of a firm or group of firms within a market to profitably charge prices above the competitive level for a sustained period of time.
Example: Competitive firms
Monopolistic Competition: is a type of imperfect competition such that many producers sell products that are differentiated from one another and hence are not perfect substitutes.
Example: Books, computers, and movies
Differentiation: the action or process of differentiating.
Example: Comparing foods at a grocery store
Nonprice Competition: is a marketing strategy "in which one firm tries to distinguish its product or service from competing products on the basis of attributes like design and workmanship
Example: Brand name goods sell more units that the generic brands do
Oligopoly: a state of limited competition, in which a market is shared by a small number of producers or sellers.
Example: Verizon and T-Mobile
Price War: a fierce competition in which retailers cut prices in an attempt to increase their share of the market.
Example: Target decreasing the cost on toys to look better than Wal-Mart
Collusion: secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others.
Example: there are four major cable providers in the U.S. The four companies meet secretly and agree not to compete with one another for customers in certain geographic areas of the country. To accomplish this, they agree on which of the four providers will "get" each territory by offering the best price or service in that territory. The other three firms agree to not offer a lower price in that territory. In return, each of the three other firms get their own territory with the same agreement. By doing this, the four providers ensure that no other competitors will enter the markets, thereby preserving their profits and territories as a whole.
Price Fixing: the maintaining of prices at a certain level by agreement between competing sellers.
Example: Stable prices on toys and cloths
Cartel: an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition.
Example: Organization of Petroleum Exporting Countries
Predatory Pricing: the pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market.
Example: Target prices are so low Wal-Mart is forced to close there store
Antitrust Laws: are statutes developed by the U.S. Government to protect consumers from predatory business practices by ensuring that fair competition exists in an open-market economy.
Example: The division of Kodak
Trust: firm belief in the reliability, truth, ability, or strength of someone or something.
Example: Honesty
Merger: a combination of two things, especially companies, into one.
Example: Grocery store combining with Target
Deregulation: is the process of removing or reducing state regulations. It is therefore opposite of regulation, which refers to the process of the government regulating certain activities.
Example: Mail Delivery
(1 Point Each) Example of Current Economic Topic From Unit Two:
1.) An example in Minnesota of a merger could be up in Pengilly, Minnesota a small local ice cream shop owned by a family merged with Dairy Queen.
2.) An example of a cartel that is protected by U.S foreign trade laws would be OPEC (Organization of the Petroleum Exporting Countries), which represents 13 major oil producing nations.
3.) An example of a black market that could be found in any state would be the sales and purchases of illegal drugs, it's one of the most promiment black markets in the United States.
4.) An example of elastic demand in current day Minnesota could be found in the garage of any home, motor vehicles are elastic demand because there are abundant amount of substitiutes and if the price rises, demand will drop because of the amount of substititutes and it's not a necessity.
5.) An example of inelastic demand in current day Minnesota could be gasoline, it's a necessity for motor transportation and there are very minimal substitutes, if any and because of that when gas prices sky rocket, gas is still going to be purchased.
(10 points) Unit Two Vocabulary Definitions & Original Examples:
Demand - Consumer's desire and willingness to pay a price for a specific good or service
Example: Paying 20 dollars for a toy at target
Law of Demand - States that all factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, vice versa
Example: A popular artist dies and, thus, he obviously will be producing no more art. Demand for his art increases substantially as people want to purchase the few pieces that exist.
Substitution Effect - Idea that as prices rise (or incomes decrease) consumers will replace more expensive items with less costly alternatives
Example: Buying a cheaper version of cheese its, instead of the cheese it brand
Income Effect - Change in an individual's or economy's income and how the change will impact the quantity demanded of a good or service
Example:If the price of meat increases, then the higher price may encourage consumers to switch to alternative food sources, such as buying vegetables.
Demand Schedule - Table of the quantity demanded of a good at different price levels
Market Demand Schedule - Table that lists the quantity of a good all consumers in a market will buy at every different price
Demand Curve - Graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price
Determinants of Demand - -Price
-Taste and Preference of individual/household
-Expectations of future prices
-Surrounding circumstances (weather, climate)
Example: You might buy a video game later knowing that it will be cheaper
Ceteris Paribus - "all other things remaining equal"
Example: rule out the possibility of 'other' factors changing, i.e. the specific causal relation between two variables is focused.
Normal Good - Any items for which demand increases when income increases
Example: Nike or Adidas shoes would be a normal good. As you make more money you are likely to move from off-brand shoes to nicer quality tennis shoes.
Inferior Good - A type of good for which demand declines as the level of income or real GDP in the economy increase
Example: when your income was lower, you bought Save Well ketchup because this brand was cheap and got the job done.
Complementary Goods - When a good's demand is increased when the price of another good is decreased
Example: Going to Best Buy to buy a computer, and than realizing you need to Microsoft Word Software as well so you buy both.
Substitute Goods - When a good's demand is increased when the price of another good is increased
Example: Pepsi verse Coke
Elasticity of Demand - -Show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price, ceteris paribus
Example: if the price of a can of coke goes up from $0.50 to $1 and income stays the same, the income that is available to spend on coke, which is $2, is now enough for only two rather than four cans of coke.
Inelastic Demand - When the price goes up, consumers' buying habits stay about the same, and when the price goes down, consumers' buying habits also remain unchanged
Example: As the price of gasoline increases, the quantity demanded doesn't decrease all that much
Elastic Demand - Type of demand that will rise or fall depending on the price of the good
Example: Candy bars
Unitary Elastic Demand - When the percentage change in quantity demanded is equal to the percentage change in price
Example: Clothing; Decreases in price of the supply, whether from a sale or discount store, often creates an approximately equal increase in demand.
Total Revenue vs. Total Profits - In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments
Example: Your paycheck before the deduction of taxes
Supply - Amount of a product that producers and firms are willing to sell at a given price when all other factors being held constant
Example: The amount of toys Toys R Us is willing to sell
Law of Supply - A microeconomic law that states, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa
Example: There is a drought and very few strawberries are available. More people want the strawberries than there are berries available. The price of strawberries increases dramatically.
Quantity Supplied - Quantity of a commodity that producers are willing to sell at a particular price at a particular point of time
Example: The price of a toy over time
Supply Schedule - Table which shows how much one or more firms will be willing to supply at particular prices under the existing circumstances
Example:
75 cents - 470 oranges a week
70 cents - 400 oranges a week
65 cents - 320 oranges a week
60 cents - 200 oranges a week
Variable - Any measurement that helps to determine how an economy functions
Example: Raw material
Elasticity of Supply - The measure of the responsiveness in quantity supplied (QS) to a change in price for a specific good (% Change QS / % Change in Price).
Example: Assume when pizza prices rise 40%, the quantity of pizzas supplied rises by 26%.(.40*.26)
Increasing Marginal Returns - As the number of new employees increases, the marginal product of an additional employee will at some point be less than the marginal product of the previous employee
Example: Suppose that Flex-Star Plaque Company produces the wildly popular Flex-Star Interactive Trophy Plaque
Diminishing Marginal Returns - As the number of new employees increases, the marginal product of an additional employee will at some point be less than the marginal product of the previous employee
Example: Labor forces, cant be too high cause than you are paying employees more money than company is making
Fixed Cost vs. Variable Cost - Fixed: expenses that have to be paid by a company, independent of any business activity
Example: Variable: expense that varies with production output
Total Cost - Costs incurred in producing something or engaging in an activity, made up of variable costs and fixed costs
Example: The cost it made to produce a certain toy
Marginal Cost - Change in total cost that comes from making or producing one additional item
Example: Producing additional vehicles requires building a new factory, the marginal cost of the extra vehicles includes the cost of the new factory.
Marginal Revenue - The increase in revenue that results from the sale of one additional unit of output. (Change in Total Revenue/Change in Output Quantity)
Example: a company producing brooms has a total revenue of $0, when it doesn't produce any output. The revenue it sees from producing its first broom is $15, bringing marginal revenue to $15 ($15 in total revenue/1 unit of product). If the revenue from the second broom is $10, the marginal revenue gained by producing the second broom is $10 (change in total revenue: $25-$15/1 additional unit).
Operating Cost - Expenses which are related to the operation of a business, or to the operation of a device, component, piece of equipment or facility; the cost of resources used by an organization just to maintain its existence
Example: Bank fees
Subsidies - A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction; usually given to remove some type of burden and is often considered to be in the interest of the public
Example: Government gives some money to help reduce the price. like going to university is expensive, but the federal government pays 50 percent of it so its some what affordable.
Excise Tax - Taxes paid when purchases are made on a specific good, such as gasoline
Example:Buying food at target and getting tax added on to the final total
Regulations - Intervene directly in market decisions such as pricing, competition, market entry, or exit.
Example: Wages, pollution effects
Cost of Production - Cost incurred by a business when manufacturing a good or producing a service. Production costs combine raw material and labor
Example: Fuel, raw material, and some labor prices
Marginal Product of Labor - The change in output that results from employing an added unit of labor
Example: Hiring more employees
Equilibrium price: the price at which the quantity of a product offered is equal to the quantity of the product in demand
Example: this market will be in equilibrium at a price of 60p per soft drink. At this price the demand for drinks by students equals the supply, and the market will clear. 500 drinks will be offered for sale at 60p and 500 will be bought - there will be no excess demand or supply at 60p.
Disequilibrium price: A cost of obtaining a product that creates unbalance in the market by not equating the quantity of the product demanded and the quantity of the product supplied.
Example: if the cost of obtaining a product is too high, the quantity of the product supplied will exceed the quantity demanded.
Excess demand: a situation in which the market demand for a commodity is greater than its market supply, thus causing its market price to rise
Example: excess supply in the labor market
Excess supply: a situation in which the market supply of a commodity is greater than the market demand for it, thus causing its market price to fall
Example: Disequilibrium
Price ceilings: are regulations designed to protect low-income individuals from not being able to afford important resources.
Example: Gotham City sets a price ceiling of $1,000 for a one bedroom apartment, where landlords cannot legally charge higher than that rate. But depending on the market demand for apartments, this price ceiling could hinder supply and create inefficiencies and shortages in the market.
Rent control: government control and regulation of the amounts charged for rented housing
Example: In Ontario the Residential Tenancies Act 2006
Price floor: is a situation when the price charged is more than or less than the equilibrium price determined by market forces of demand and supply.
Example: Minimum wage laws
Minimum wage: the lowest wage permitted by law or by a special agreement
Example: Getting paid $8.50 an hour for working at McDonalds
Surplus: an amount of something left over when requirements have been met; an excess of production or supply over demand.
the price of coffee is $7/pound. If sellers are prepared to sell 100 tons at this price but buyers are only prepared to buy 80 tons, then there is a 20 ton surplus of coffee.
Shortage: a state or situation in which something needed cannot be obtained in sufficient amounts.
Example: if you go to the store to buy a specific item, and the item is not at the store for sell
Search Costs: is one facet of transaction costs or switching costs
Example: when going to a store to buy shampoo, and you are confronted with an assortment of products in the shampoo area
Role of Prices: The price of goods plays a crucial role in determining an efficient distribution of resources in a market system.
Example: Price for a doll has to be fair and efficient
Supply Shock: is an event that suddenly changes the price of a commodity or service.
Example: an unexpected increase in the world supply of oil leads to an increase in real GDP and falling prices for gasoline in the town of Chanhassen
Rationing: allow each person to have only a fixed amount of (a particular commodity).
Example: a rise in the market price of 'smart' phones sends a signal to potential manufacturers to enter this market, and perhaps leave another one.
Black Market: an illegal traffic or trade in officially controlled or scarce commodities
Example: buying or selling illegal drugs
Spillover Costs: also known as "negative externality," is a term used to describe some loss or damage that a market transaction causes a third party.
Example: All children must be vaccinated so they don’t spread a disease
Perfect Competition: 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.
Example: Caribou vs Starbucks
Commodity: a raw material or primary agricultural product that can be bought and sold,
Example: Copper or coffee.
Barrier to Entry: are obstacles that make it difficult to enter a given market.
Example: Money, target market
Imperfect Competition: the situation prevailing in a market in which elements of monopoly allow individual producers or consumers to exercise some control over market prices
Example: Monopolistic, monopsony
Monopoly: the exclusive possession or control of the supply or trade in a commodity or service.
Example: Water supplied by local public utility
Economies of Scale: a proportionate saving in costs gained by an increased level of production.
Example: Buying in bulks, and high fixed costs
Natural Monopoly: is a monopoly in an industry in which it is most efficient (involving the lowest long-run average cost) for production to be permanently concentrated in a single firm rather than contested competitively.
Example: Utilities industry
Government Monopoly: is a form of coercive monopoly in which a government agency or government corporation is the sole provider of a particular good or service and competition is prohibited by law.
Example: US Postal Service
Patent: a government authority or license conferring a right or title for a set period, especially the sole right to exclude others from making, using, or selling an invention.
Example: Technical solutions and simple clever ideas
Franchise: an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities
Example: A & W Restaurants
License: a permit from an authority to own or use something, do a particular thing, or carry on a trade
Example: Drivers license, hunting license
Price Discrimination: the action of selling the same product at different prices to different buyers, in order to maximize sales and profits.
Example: Selling a pair of shorts for $10 and another pair for $20
Market Power: is the ability of a firm or group of firms within a market to profitably charge prices above the competitive level for a sustained period of time.
Example: Competitive firms
Monopolistic Competition: is a type of imperfect competition such that many producers sell products that are differentiated from one another and hence are not perfect substitutes.
Example: Books, computers, and movies
Differentiation: the action or process of differentiating.
Example: Comparing foods at a grocery store
Nonprice Competition: is a marketing strategy "in which one firm tries to distinguish its product or service from competing products on the basis of attributes like design and workmanship
Example: Brand name goods sell more units that the generic brands do
Oligopoly: a state of limited competition, in which a market is shared by a small number of producers or sellers.
Example: Verizon and T-Mobile
Price War: a fierce competition in which retailers cut prices in an attempt to increase their share of the market.
Example: Target decreasing the cost on toys to look better than Wal-Mart
Collusion: secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others.
Example: there are four major cable providers in the U.S. The four companies meet secretly and agree not to compete with one another for customers in certain geographic areas of the country. To accomplish this, they agree on which of the four providers will "get" each territory by offering the best price or service in that territory. The other three firms agree to not offer a lower price in that territory. In return, each of the three other firms get their own territory with the same agreement. By doing this, the four providers ensure that no other competitors will enter the markets, thereby preserving their profits and territories as a whole.
Price Fixing: the maintaining of prices at a certain level by agreement between competing sellers.
Example: Stable prices on toys and cloths
Cartel: an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition.
Example: Organization of Petroleum Exporting Countries
Predatory Pricing: the pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market.
Example: Target prices are so low Wal-Mart is forced to close there store
Antitrust Laws: are statutes developed by the U.S. Government to protect consumers from predatory business practices by ensuring that fair competition exists in an open-market economy.
Example: The division of Kodak
Trust: firm belief in the reliability, truth, ability, or strength of someone or something.
Example: Honesty
Merger: a combination of two things, especially companies, into one.
Example: Grocery store combining with Target
Deregulation: is the process of removing or reducing state regulations. It is therefore opposite of regulation, which refers to the process of the government regulating certain activities.
Example: Mail Delivery
(1 Point Each) Example of Current Economic Topic From Unit Two:
1.) An example in Minnesota of a merger could be up in Pengilly, Minnesota a small local ice cream shop owned by a family merged with Dairy Queen.
2.) An example of a cartel that is protected by U.S foreign trade laws would be OPEC (Organization of the Petroleum Exporting Countries), which represents 13 major oil producing nations.
3.) An example of a black market that could be found in any state would be the sales and purchases of illegal drugs, it's one of the most promiment black markets in the United States.
4.) An example of elastic demand in current day Minnesota could be found in the garage of any home, motor vehicles are elastic demand because there are abundant amount of substitiutes and if the price rises, demand will drop because of the amount of substititutes and it's not a necessity.
5.) An example of inelastic demand in current day Minnesota could be gasoline, it's a necessity for motor transportation and there are very minimal substitutes, if any and because of that when gas prices sky rocket, gas is still going to be purchased.