Market Failure - Market power Flashcards
Market Power
The ability of a firm to manipulate prices of a good or service.
Perfect Competition
A market structure with many firms holding no market power, no barriers to entry, and homogeneous products.
Monopolistic Competition
A market structure with many firms holding little market power, low barriers to entry, and differentiated products.
Oligopoly
A market structure with a few large firms holding significant market power, high barriers to entry, and differentiated products.
Collusive Oligopoly
A market structure where oligopolistic firms engage in practices to restrict competition by price fixing or limiting output.
Monopoly
A market structure with one large firm holding all market power, high barriers to entry, and no close substitute products.
Natural Monopoly
A market structure where only one large firm is able to operate with profit.
Revenue
The money gained by a firm for selling their goods and services.
Fixed Costs
Expenses that do not change with output of a good or service.
Variable Costs
Expenses that change with output of a good or service.
Profit
The money remaining after expenses have been subtracted from revenue.
Marginal Revenue
The additional revenue when producing one additional unit of a good or service.
Marginal Cost
The additional cost when producing one additional unit of a good or service.
Abnormal Profit
Profit left after accounting for costs, incentivizing the entry of new firms into the market.
Normal Profit
When the cost of production equals the revenue of selling.
