Perfect Competition and pure monopoly Key terms Flashcards
a perfectly competitive market
In a perfectly competitive market, both buyers and sellers believe that their own actions have no effect on the market price.
a monopolist
In contrast, a monopolist, the only seller or potential seller in the industry, sets the price
normal profits.
When economic profits are zero the firm makes normal profits. Its accounting profits just cover the opportunity cost of the owner’s money and time.
The marginal firm
The marginal firm in an industry just breaks even.
Comparative statics
examines how equilibrium changes when demand or cost conditions shift.
A monopolist
is the sole supplier and potential supplier of the industry’s product.
monopoly power
the excess of price over marginal cost is a measure of monopoly power
A discriminating monopoly
A discriminating monopoly charges different prices to different people.
