Chapter 7 - Pure Competition Flashcards
Pure competition
A market structure in which a vey large number of firms sells a standardized product; into which entry is easy; in which the individual seller has no control over the product price and in which there is no non-price competition; a market characterised by a very large number of buyers
Pure monopoly
A market structure in which one firm sells a unique product, into which entry is blocked in, which the single firm has considerable control over product price and in which non-competition may or may not be found
Monopolistic competition
A market structure in which many firms sell a differentiated product, in which entry is relatively easy, in which the firm has some control over its product price and in which there is considerable non-price competition.
Oligopoly
A market structure in which a few firms sell either a standardised or differentiated product, into which entry is difficult, in which the firm has limited control over product price because of mutual interdependence, and in which there is typically non-price competition
Imperfect competition
All market structures except pure competition includes monopoly, monopolistic competition and oligopoly
Price taker
A seller of a product or resource that is unable to affect the price at which a product or resource sells by changing the amount it sells.
Average revenue
Total revenue from the sale of a product divided by the quantity of the product 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 rans received by a firm from the sale of a product, equal to the total expenditures for the product by the firm, equal to the quantity sold multiplied by the price at which it is sold.
Marginal revenue
The change in total revenue that results from the sale of one additional unit of a firms product, equal to the change in total revenue divided by the change in the quantity of the product sold
Barriers to entry
Anything that artificially prevents the entry of firms into an industry
Break-even point
An output at which a firm makes a normal profit but not an economic profit
MR=MC
The principle that a firm will maximize its profit by producing the output at which marginal revenue and marginal cost are equal, provided product price is equal to or greater than average variable cost.
Short-run supply curve
A supply curve that show the quantity a firm in a purely competitive industry will offer to sell at various prices in the short run, the portion of the firms short-run marginal cost curve that list about its average variable cost curve.
