Perfect Competition

Flashcards about Perfect Competition lecture notes.

Perfect Competition

A market structure with many buyers and sellers, a standard product, and easy entry and exit.

Monopolistic Competition

A market structure with many buyers and sellers, slightly different products, and easy entry and exit.

Oligopoly

A market structure with a few businesses, protected by entry barriers, providing standard or similar products.

Monopoly

A market structure with a single business, protected by entry barriers, providing a product with no close substitutes.

Entry Barriers

Obstacles that prevent new businesses from entering a market.

Market Power

A business’s ability to affect the price it charges.

Perfect Competitor's Demand Curve

Demand curve for a perfect competitor that is horizontal at the prevailing market price.

Average Revenue

Total revenue divided by output.

Marginal Revenue

Change in total revenue divided by change in output.

Profit-Maximizing Output Rule

States that profit is maximized when marginal revenue equals marginal cost.

Breakeven Point

The point where a business breaks even while maximizing profit; where price equals minimum AC.

Shutdown Point

The lowest price at which a business will choose to operate; where price equals minimum AVC.

Perfect Competitor’s Supply Curve

A perfect competitor’s marginal cost curve above the shutdown point.

Entry and Exit of Businesses

Drives a perfectly competitive market to the breakeven point in the long run.

Minimum-Cost Pricing

Price equals minimum average cost.

Marginal-Cost Pricing

Price equals marginal cost.

Esther Duflo's Projects

Projects to encourage the poor to make choices that may be costly in the short run but provide significant long-term benefits.

Randomized Controlled Trials

Mimic scientific methods employed in laboratory conditions.

Monopoly

A market structure characterized by a single seller, high barriers to entry, and unique products or services.

Oligopoly

A market structure with a small number of firms, significant barriers to entry, and interdependent decision-making.