Chapter 9: Pure Competition

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)

Allocative efficiency

________- Resources apportioned among firms + industries to yield mix of goods /services most wanted by society.

Producer

________ surplus- Difference between the minimum prices that ________ are willing to accept for a product (as shown by the supply curve) and the market price of the product.

Oligopoly

________- Only a few sellers of a standardized or differentiated product; mutual interdependence.

Productive efficiency

________- Goods being produced in least costly way.

Invisible hand

________- Businesses seek to further self- interest → Unconsciously benefits entire society.

Monopolistic competition

________- Relatively large number of sellers producing differentiated products; non- price competition.

Pure

________ monopoly- 1 firm is sole seller of good /service; no market entry.

Price taker

________- Can not change market price, can only adjust to it.

Pure competition

________- A very large number of firms producing a standardized product; easy market entry /exit.

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.