Chapter 18: Competition and Monopoly

Perfect competition

________ is a type of market that has several distinguishing characteristics: identical products, complete information, many buyers and sellers, and easy entry and exit from the market.

monopoly

A(n) ________ is a market with only one seller of a good or service.

Barriers to entry

are obstructions that make it difficult for new firms to enter a market.

Total revenue

________ is the amount of money earned when a supplier sells a given quantity of a good.

Profit

________ is the difference between a firms total revenue and its total cost.

Antitrust laws

________ are laws that promote competition between businesses and prohibit anti- competitive behaviour by firms with large control over markets.

Normal profit

________ is the profit that business owners could earn if they applied their resources and skills in their next best business alternative.

The profit maximizing output level for a firm occurs where

MR (Marginal revenue)= MC (Marginal cost)

profit maximizing level of output

The ________ produced by a monopoly is lower than what would be produced by a competitive firm.

Marginal revenue

________ is the change in total revenue earned when an additional unit of output is produced and sold.

distinguishing characteristics of a perfect competition market

identical products, complete information, many buyers and sellers, and easy entry and exit from the market