Key terms - Monopolistic competition Flashcards
1
Q
Efficient scale
A
The quantity at which ATC is minimum.
2
Q
Excess capacity
A
Occurs when a firm produces below its efficient scale.
3
Q
Markup
A
The amount by which the price exceeds marginal cost.
4
Q
Monopolistic competition
A
A market structure in which: a large number of firms compete; each firm produces a differentiated product; firms compete on product price, quality, and marketing; firms are free to enter and exit.
5
Q
Product differentiation
A
Making a product that is slightly different to those of competing firms.
6
Q
Signal
A
An action taken by an informed person/firm to send a message to uninformed people.
