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Glossary

  1. Differentiated or heterogeneous: Products (goods or services) that are differentiated by real or imagined differences in quality or other features, such as color, taste, styling, warranties, or complimentary services provided to those who buy the products.
  2. Homogenous: Products (goods or services) that are identical, with no differentiating features.
  3. Perfect (Pure) Competition: A market structure in which a large number of relatively small firms produce and sell identical products and in which there are no significant barriers to entry into or exit from the industry. Firms in perfect competition are price takers and in the long run will earn only normal profits
  4. Monopoly: A market structure in which there is a single supplier of a good or service. Also, a firm that is the single supplier of a good or service for which there are no close substitutes; also known as a monopolist. There are four types of monopolies: natural, key resource, geographic, and government-sponsored.
  5. Oligopoly: A market structure in which a few relatively large firms account for all or most of the production or sales of a good or service in a particular market, and where barriers to new firms entering the market are very high. Some oligopolies produce homogeneous products; others produce heterogeneous products.
  6. Monopolistic Competition: A market structure in which slightly differentiated products are sold by a large number of relatively small producers, and in which the barriers to new firms entering the market are low.
  7. Non-price Competition: Competition by firms trying to attract customers by methods other than reducing prices; examples include advertising and promotional gifts.
  8. Price taker: A firm that is unable to set a price that differs from the market price without losing profit; a firm in a perfectly competitive industry.
  9. Price maker: A business that holds a considerable amount of power over the price it charges for its products or services.