Chapter 14: Market Structure and Degrees of Market Power

These flashcards cover key concepts from Chapter 14, focusing on market structures, market power, and the implications of competition and pricing strategies.

Market Structure

The competitive environment in which businesses operate, influencing pricing strategy and output decisions.

Market Power

The extent to which a seller can charge a higher price without losing many sales to competing businesses.

Perfect Competition

A market structure where all businesses sell identical goods with many sellers and many buyers, resulting in no market power.

Monopoly

A market structure with only one seller, resulting in significant market power for that seller.

Oligopoly

A market structure characterized by a few large sellers, leading to substantial market power but less than in a monopoly.

Monopolistic Competition

A market structure with many small businesses competing by selling differentiated products, allowing for some market power.

Product Differentiation

Efforts by sellers to make their products differ from those of their competitors, enhancing market power.

Marginal Revenue

The additional revenue gained from selling one more unit of a product.

Demand Curve

A graph showing how many units of a product consumers will buy at various prices, illustrating market power.

Cost-Benefit Principle

The principle that businesses should consider the benefits and costs of selling additional units.

Antitrust Policy

Laws and regulations designed to promote competition and prevent monopolistic behavior.

Natural Monopoly

A market where a single firm can supply the entire market at a lower cost than multiple firms due to decreasing marginal costs.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, intended to protect consumers.

Collusion

An agreement among firms to limit competition, such as agreeing to fix prices or divide markets.

Imperfect Competition

A market structure featuring limited competition, where sellers have some degree of market power.

Economic Profit

The difference between total revenue and total cost, particularly when a firm earns more than it would under perfect competition.