PHASE 2 - Adobe Ch. 7 - Pure Competition Flashcards Preview

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Flashcards in PHASE 2 - Adobe Ch. 7 - Pure Competition Deck (27):
1

firm's conduct

price it charges and output qty produces, depends on structure of industry in which it operates - no typical industry

2

four market structures

pure competiton, monopolistic competition, oligopoly, pure monoply

3

pure competition

large number of firms producing a standardizd product, most competitive, new firsm enter and exit very easily, homogenized products produced, no individual ability

4

monopolistic competition

relativty large number of sellers producing differentiated product, implies widespread non price competition- selling strategy whereone firm tries to distinguish its product from all competing producs on basis of attributes like design, entry exit relativly easy

5

oligopoly

only a few sellers of std/differentiated product= each firm is affected by decisions of its rivals and take those decisions into account in determining own price, output, advertise, R and D etc, firms interact strategically in market place, game theory applicable

6

pure monopoly

market structure in which one firm is sole seller of prouct for where there is no good substitute, least ocmpetitive

7

what is pure competition

basic feature of purely competitive market is presence of large number of independently acting sellers, produce standard/identical product, perfectly competitive firms dont attempt to differetiate product and dont engage in non price competitionn, individual firms dont exert control over product price, output doesnt influence total supply or product price, enter freely, exit freely

8

average revenue

revenue per unit of output

9

marginal revenue

additional revenue firm will recieve by producing one mor eunit of output

10

industry

all firms producing a partiular product- individaul compettive firm cant bc its small

11

MR equals

D

12

AR equals

P

13

reemer the acronym

MR. DARP

14

MR is the slope of

TR line

15

MR is change in

total revenue due to change in output

16

Price equals

MC

17

purely cometitive firm is

price taker, cant attempt to maximize its profit by raising or lowering the price it charges, price set by s/d in overall market, maximizes economc profit by adjusting output qty thru amts of variable inputs used,

18

MC greater than MC

dont porduce

19

in short run, firm will maximize profit by producing output at

MR = MC

20

total economic profit is

ATC - MR * Total Product

21

min AVC is

shutdown pt

22

min ATC pt is

breakeven pt

23

constant cost industry

entry exit dont affect resource prices and dont affect long run ATC, perfefctly elastic supply

24

increasing cost industry

entry increases, exit decreases resource priceses and thus entry increases LR ATC of individual fimrs , exit decreases LR ATC of individual firms, upward sloping

25

decreasing cost indisutry

entry decreases resource rpice and decrease long run ATC, exit inrease resource price and increase long Run ATC of individual firms

26

normal profit

0

27

triple equality

P = MC = minATC