Types of Market Structures and Profit Maximization

This set of flashcards covers key terms and concepts related to market structures, profit maximization, and cost definitions in economics.

Perfect Competition

many firms, free entry and exit, firms being price takers.

Monopoly

single firm controls the entire market, being the sole seller with significant price-setting ability

Oligopoly

few firms have the ability to set prices, often leading to collusion.

Monopolistic Competition

many firms that sell similar but not identical products, allowing some degree of price setting.

Profit Maximization

firm determines the price and output level that leads to the highest profit

Entry Conditions

Factors that determine how easily firms can enter a market

Shutdown Price

The minimum price at which a firm can produce without incurring losses, equal to minimum average variable cost

Long Run Equilibrium

where firms in the market earn zero economic profit, with prices equal to minimum average total cost