Market Structures and Resource Markets

Vocabulary flashcards for review of market structures, competition, monopoly, and resource pricing.

Pure Competition

Market model with many firms, identical products, and no control over price.

Monopolistic Competition

Market model with many firms, differentiated products, and some price control.

Oligopoly

Market model with few large firms and interdependent decisions.

Pure Monopoly

Market model with one firm, a unique product, and complete control over price.

Price Taker

Situation where a seller has no power to influence the market price.

MR=MC

The point where producing more would reduce profit

Marginal Cost Curve

The firm’s supply curve in competition.

Constant-Cost Industry

Entry/exit doesn’t affect costs

Increasing-Cost Industry

Costs rise with expansion.

Decreasing-Cost Industry

Costs fall with expansion.

Allocative Efficiency

P = MC

Productive Efficiency

P = minimum ATC

Antitrust Laws

Prevent monopolistic practices and promote competition.

Game Theory

Models strategic behavior; firms consider rivals' reactions

Nash Equilibrium

Found where firms can't improve their payoff by unilaterally changing strategy.

Derived Demand

Demand for a resource comes from the demand for the final good it produces.

Elasticity of Resource Demand

Measures sensitivity of resource demand to wage/price changes.

Marginal Productivity Theory

Demand for a resource is based on its marginal revenue product.