Market Structure

Question 1

firm cost curves

Answer 1

an upward-sloping MC curve

an ATC curve which is U-shaped and cuts through MC at its
minimum point

an AVC curve which is U-shaped, positioned below ATC, and cuts through MC at its minimum point

Question 2

firms

Answer 2

the characteristics of the market in which firms operate then determines the shape of the demand curve each individual firm faces, and this determines the marginal revenue curve

the shape of the D and MR curve faced by each individual firm is determined by the level of competition, the number of competing firms and the number of goods sold, in the market in which it operates

Question 3

market demand

Answer 3

the total demand for a good or service, which is the sum of the individual demand curves for each individual buyer in the market

Question 4

individual firm demand

Answer 4

the demand curve facing each individual firm in that market

Question 5

competition

Answer 5

the main factor that distinguishes different market structures is the degree of competition

the greater the degree of competition in markets the lower the equilibrium price is likely to be, the greater is the equilibrium quantity likely to be and the more efficient is going to be the allocation of resources

Question 6

competition mechanisms

Answer 6

the number of firms in the market

the similarity of the product being produced

the ease of entry and exit in the market