Flashcards in Chapter 10 Deck (12):
Long-run process of expanding production in response to a sustained pattern of profit opportunities.
Structures in which a business can sell its products. These include perfect competition, monopolistic competition, oligopoly, and monopoly.
Market structure with numerous buyers and sellers. The firms offer homogenous product, perfect information, and knowledge.
Involves many firms competing against each other in the sales of somewhat distinctive products. Examples include clothing stores that sell different styles of clothing and restaurants that offer differing cuisines. Monopolistic competition even includes distinct producers who sell items—such as gold balls or beer—that may be somewhat similar but differ in public perception due to branding and advertising.
Market structure in which a small number of firms, perhaps just two or three, sell all of the output.
Market structure in which one firm produces all of the output in a market.
Description of firms in perfect competition. If a firm in a perfectly competitive market raises the price of its product by so much as a penny, it will lose all of
its sales to competitors. Pressure from competing firms forces them to accept the prevailing price in the market.
Refers to a firm’s ability to raise and maintain the price of its product.
(MR) The additional revenue received when one more unit of a product is sold. In perfect competition, the marginal revenue equals price (P), i.e., MR = P. Since perfectly competitive firms have no market power, when they change their level of output, the market price does not change.
The additional cost of producing one more unit. Marginal cost can be calculated by taking the change in total cost and dividing it by the change in quantity.
The intersection of the average variable cost curve and the marginal cost curve, which shows the price where a firm lacks enough revenue to cover its variable costs.