Studied by 5 people
Pure competition
A very large number of firms producing a standardized product; easy market entry/exit
Allocative efficiency
________- Resources apportioned among firms + industries to yield mix of goods /services most wanted by society.
Pure monopoly
1 firm is sole seller of good/service; no market entry
Monopolistic competition
Relatively large number of sellers producing differentiated products; non-price competition
Oligopoly
Only a few sellers of a standardized or differentiated product; mutual interdependence
Price taker
Cannot change market price, can only adjust to it
Average revenue
Revenue per unit
Total revenue
Price * corresponding quantity firm can sell
Marginal revenue
Change in total revenue (or the extra revenue) that results from selling one more unit of output
Break-even point
Firm makes normal profit but not economic profit
MR = MC rule
In the short run, the firm will maximize profit or minimize loss by producing the output at which marginal revenue equals marginal cost (as long as producing is preferable to shutting down).
Short-run supply curve
Solid segment of marginal cost curve
Long-run supply curve
Effect that changes in number of firms in industry will have on costs of individual firms in industry
Constant cost industry
Industry expansion or contraction will not affect resource prices and therefore production costs
Decreasing cost industries
Industry expands → Firms experience lower costs
Productive efficiency
Goods being produced in least costly way
Allocative efficiency
Resources apportioned among firms + industries to yield mix of goods/services most wanted by society
Consumer surplus
Difference between the maximum prices that consumers are willing to pay for a product (as shown by the demand curve) and the market price of that product
Producer surplus
Difference between the minimum prices that producers are willing to accept for a product (as shown by the supply curve) and the market price of the product
Note 
Flashcard (90)