A very large number of firms producing a standardized product; easy market entry/exit
2
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Allocative efficiency
________- Resources apportioned among firms + industries to yield mix of goods /services most wanted by society.
3
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Pure monopoly
1 firm is sole seller of good/service; no market entry
4
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Monopolistic competition
Relatively large number of sellers producing differentiated products; non-price competition
5
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Oligopoly
Only a few sellers of a standardized or differentiated product; mutual interdependence
6
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Price taker
Cannot change market price, can only adjust to it
7
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Average revenue
Revenue per unit
8
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Total revenue
Price * corresponding quantity firm can sell
9
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Marginal revenue
Change in total revenue (or the extra revenue) that results from selling one more unit of output
10
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Break-even point
Firm makes normal profit but not economic profit
11
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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).
12
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Short-run supply curve
Solid segment of marginal cost curve
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Long-run supply curve
Effect that changes in number of firms in industry will have on costs of individual firms in industry
14
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Constant cost industry
Industry expansion or contraction will not affect resource prices and therefore production costs
15
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Decreasing cost industries
Industry expands → Firms experience lower costs
16
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Productive efficiency
Goods being produced in least costly way
17
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Allocative efficiency
Resources apportioned among firms + industries to yield mix of goods/services most wanted by society
18
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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
19
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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