1. Chapters 9 & 10 Competition & Production Competition gives consumers choices and lowers prices. Perfect Competition – market situation in which there are numerous buyers and sellers, and no single buyer or seller can affect price (agriculture considered best example of perfect competition)

2. Monopoly Monopoly – market situation in which a single supplier makes up an entire industry for a good or service with no close substitutes (Microsoft & Wal-Mart) Characteristics – a single seller, no substitutes, no entry & almost complete control of market price Barriers to Entry – obstacles to competition that prevent others from entering a market

3. Monopolies Patent – exclusive right to make, use, or sell and invention for a specified number of years Copyright – exclusive right to sell, publish or reproduce creative works for a specified number of years Oligopoly – industry dominated by a few suppliers who exercise some control over price (gasoline?) Product Differentiation – manufacturers’ use of minor differences in quality and features to try to differentiate between similar goods and services (autos) Cartel – arrangement among groups of industrial businesses to reduce international competition by controlling the price, production, and distribution (OPEC, Asia, & drugs)

4. Government Policies Antitrust Legislation – federal and state laws passed to prevent new monopolies from forming and to break up those that already exist (Sherman Antitrust Act) Merger – a combined company that results when one corporation buys more than half the stock of another corporation (airlines & schools) Conglomerate – larger corporation made up of smaller corporations dealing in unrelated businesses (Proctor & Gamble) Deregulation – reduction of government regulation and control over business activity

5. Chapter 10 Financing & Producing Goods Financing – obtaining funds or money capital for business expansion Cost-Benefit Analysis – a financial process in which a business estimates the cost of a project and compares it with the benefits received Revenues – total income from sales of output

6. The Production Process Production – process of changing resources into goods that satisfy the needs and wants of individuals and businesses Consumer Goods – goods produced for individuals and sold directly to the public to be used as they are Quality Control – overseeing the production, distribution and use of goods Automation – production process in which machines do the work and people oversee them