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AP Microeconomics unit 4 study guide
Perfect Competition
-Homogeneous products
-Large number of producers
-Price taker
-Easy entry/exit
-Independently acting sellers
-Perfectly elastic
-Produce at MR=MC
Monopoly
-Produces a product that has no close substitutes
-No entry/exit
-Single seller
-Inelastic
-Regulated by government
-Has control over price (price maker)
-Produces at MR=MC
Monopolistic Competition
-Differentiated produces
-Highly competitive
-Easy entry/exit
-Large number of buyers/sellers
-Non-price competition
-Price makers
-Elastic
-Produces at MR=MC
Oligopoly
-Homogeneous and differentiated products
-Few large producers
-Firms set price
-Mutual interdependence
-Produces at MR=MC
Profit maximizing quantity
In perfect competition
-Go to where MC touches Price
In monopolistic competition
-Go to where MC=MC then move up to demand line
Total Revenue
-Price times Quantity
Total Cost
ATC times quantity
Per unit profit
P-ATC
Total Profit
TR-TC
Fair return price
P=ATC
(demand is equal to price)
Socially Optimal price
P=MC
(demand is equal to price)
Allocative efficiency
-Perfect competition
-P=MC
-Firm is producing the best price and quantity
Productive efficiency
-P=Minimum ATC
-Producing the maximum amount of goods with the least amount of resources
Game theory
-Only for oligopoly
-The study of strategic interactions among economic agents
Note 
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