competitive market
a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker
average revenue
total revenue divided by the quantity sold
marginal revenue
the change in total revenue from an additional unit sold
profit maximization
a quantity of output such that marginal revenue equals marginal cost
monopoly
a firm that is the sole seller of a product without close substitutes
natural monopoly
a monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms
price discrimination
the business practice of selling the same good at different prices to different customers
welfare
in a monopolized market like all markets includes the welfare of both consumers and producers
deadweight loss
the inefficiency that arises whenever a monopolist charges a price above marginal cost.
monopolistic competition
a market structure in which many firms sell products that are similar but not identical
product differentiation
inherent in monopolistic competition leads to the use of advertising and brand names.
oligopoly
a market structure in which only a few sellers offer similar or identical products
collusion
an agreement among firms in a market about quantities to produce or prices to charge
cartel
a group of firms acting in unison
Prisoners' Dilemma
a particular "game" between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial
Globalization
The close integration of countries and peoples of the world.
Purchasing power parity (PPP)
A conversion that determines the equivalent amount of goods and services that different currencies can purchase.
Scenario planning
A technique to prepare and plan for multiple scenarios (either high or low risk).
risk management
The identification and assessment of risks and the preparation to minimize the impact of high-risk
gross national income (GNI)
GDP plus income from non-resident sources abroad. GNI is the term used by the World Bank and other international organizations to supersede the term GNP.
gross national product (GNP)
GDP plus income from non-resident sources abroad.
reverse innovation
An innovation that is adopted first in emerging economies and is then diffused around the world.
international business (IB) (1)
A business (or firm) that engages in international (crossborder) economic activities and/or (2) the action of doing business abroad.
semiglobalization
A perspective that suggests that barriers to market integration at borders are high
BRIC
Brazil Russia India and China.
base of the pyramid (BOP)
Economies where people make less than $2
emerging economies
A term that has gradually replaced the term "developing countries" since the 1990s.
emerging markets
A term that is often used interchangeably with "emerging economies."
nongovernmental organizations (NGO's)
An organization that is not affiliated with governments.
expatriate manager
A manager who works abroad
gross domestic product (GDP)
The sum of value added by resident firms
foreign direct investment (FDI)
Investment in
group of 20 (G-20)
The group of 19 major countries plus the European Union (EU) whose leaders meet on a biannual basis to solve global economic problems.
liability of foreignness
The inherent disadvantage that foreign firms experience in host countries because of their non-native status.
global business
Business around the globe.
international premium
A significant pay raise when working overseas.
multinational enterprise (MNE)
A firm that engages in foreign direct investment (FDI).
triad
North America Western Europe and Japan