KEY TERMS
allocative efficiency producing the optimal quantity of some output; the quantity where the marginal benefit to society of one more unit just equals the marginal cost
barriers to entry the legal, technological, or market forces that may discourage or prevent potential competitors from entering a market
copyright a form of legal protection to prevent copying, for commercial purposes, original works of authorship, including books and music
deregulation removing government controls over setting prices and quantities in certain industries
intellectual property the body of law including patents, trademarks, copyrights, and trade secret law that protect the right of inventors to produce and sell their inventions
legal monopoly legal prohibitions against competition, such as regulated monopolies and intellectual property protection
marginal profit profit of one more unit of output, computed as marginal revenue minus marginal cost
monopoly a situation in which one firm produces all of the output in a market
natural monopoly economic conditions in the industry, for example, economies of scale or control of a critical resource, that limit effective competition
patent a government rule that gives the inventor the exclusive legal right to make, use, or sell the invention for a limited time
predatory pricing when an existing firm uses sharp but temporary price cuts to discourage new competition
trade secrets methods of production kept secret by the producing firm
trademark an identifying symbol or name for a particular good and can only be used by the firm that registered that trademark