ECON: Chapter 6: Terms to Remember Flashcards
market structure
The number and relative size of firms in an industry.
competitive firm
A firm without market power, with no ability to alter the market price of the goods it produces.
competitive market
A market in which no buyer or seller has market power
monopoly
A firm that produces the entire market supply of a particular good or service.
market power
The ability to alter the market price of a good or service.
production decision
The selection of the short-run rate of output (with existing plant and equipment).
total revenue
The price of a product multiplied by the quantity sold in a given time period, p × q.
profit
The difference between total revenue and total cost.
marginal cost (MC)
The increase in total costs associated with a one-unit increase in production.
competitive profit maximization rule
Produce at that rate of output where price equals marginal cost.
supply
The ability and willingness to sell (produce) specific quantities of a good at alternative prices in a given time period, ceteris paribus.
market supply
The total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period, ceteris paribus.
equilibrium price
the price at which the quantity of a good demanded in a given time period equals the quantity supplied.
barriers to entry
Obstacles that make it difficult or impossible for would-be producers to enter a particular market (e.g., patents).
market mechanism
The use of market prices and sales to signal desired outputs (or resource allocations).
