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Microecon Ch10
| Question | Answer |
|---|---|
| Market structure | The characteristics of an industry that define the likely behavior and performance of its firms. Primary characteristics: number of firms there are, if they're selling a differentiated product, ease of entry, the degree of control they have on outputs |
| Pure competition | A market structure in which a very large number of firms sells a standardized product. Entry is easy, and the individual seller has no control on the product's price. Many buyers and sellers. |
| Pure monopoly | A market structure in which one firm sells a unique product, into which entry is blocked, in which the firm has a considerable control over price. Nonprice competition may or may not be found. |
| Monopolistic competition | A market structure in which many firms sell a differentiated product, entry is relatively easy, each firm has some control over price, and there is significant nonprice competition. |
| Oligopoly | A market structure in which a few firms sell either a standardized or differentiated product, into which entry is difficult, in which the firm has limited control over the product price because of mutual independence. Typically has nonprice competition. |
| Imperfect condition | All market structures except for pure competition. Includes monopoly, monopolistic competition, and oligopoly |
| Price taker | A seller (or buyer) that is unable to affect the price at which a product or resource sells by changing the amount it sells (or buys) |
| Average revenue | Total revenue divided by quantity demanded (amount sold); equal to the price at which the product is sold when all units of the product are sold at the same price |
| Total revenue | The total number of dollars received from by a firm from the sale of a product; equal to the total expenditures for the product produced by the firm; equals quantity sold multiplied by price sold |
| Marginal revenue | The change in total revenue that results from the sale of 1 additional unit of a firm's product; equal to the change in revenue over the change in quantity sold |
| Break-even point | An output at which a firm makes a normal profit (TR=TC) but not an economic profit |
| MR=MC rule | The principle that a firm will maximize its profit (or minimize its losses) by producing an output at which the marginal revenue and marginal costs are equal, provided product price is equal to or greater than average variable cost |
| Short-run supply curve | A supply curve that shows the quantity of a product a firm in a purely competitive industry will offer to sell at various prices in the short run; the portion of the firm's short-run marginal cost curve that lies above its average-variable-cost curve |
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SpanishAccount33
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