Chapter 12 Flashcards
(6 cards)
1
Q
efficient scale
A
the quantity at which average total cost is a minimum–the quantity at the bottom of the U-shaped ATC curve
2
Q
excess capacity
A
a firm has excess capacity if it produces below its efficient scale
3
Q
markup
A
the amount by which the firm’s price exceeds its marginal cost
4
Q
monopolistic competition
A
a market structure in which a large number of firms make similar but slightly different products and compete on product quality, price, and marketing, and firms are free to enter or exit the market
5
Q
product differentiation
A
making a product slightly different from the product of a competing firm
6
Q
signal
A
an action taken by an informed person (or firm) to send a message to uniformed people
