Chapter 23 Key Terms McConnell and Brue 14th Edition
A market structure in which a very large number of firms sell a standardized product into which entry is very easy in which the individual seller has no control over the product price and in which there is no nonprice competition; a market characterized by a very large number of buyers and sellers.
A market structure in which one firm sells a unique product into which entry is blocked in which the single firm has considerable control over product price and in which nonprice competition may or may not be found.
A market structure in which many firms sell a differentiated product into which entry is relatively easy in which the firm has some control over its product price and in which there is considerable nonprice competition.
A market structure in which a few firms sell either a standardized or differentiated product into which entry is difficult in which the firm has limited control over product price because of mutual interdependence (except when there is collusion among firms) and in which there is typically nonprice competition.
imperfect competition
All market structures except pure competition; includes monopoly monopolistic competition and oligopoly.
price taker
A seller (or buyer) of a product or resource who is unable to affect the price at which a product or resource sells by changing the amount it sells (or buys).
average revenue
Total revenue from the sale of a product divided by the quantity of the product sold (demanded); equal to the price at which the product is sold when all units of the product are sold at the same price.
total revenue
The total number of dollars received by a firm (or firms) from the sale of a product; equal to the total expenditures for the product produced by the firm (or firms); equal to the quantity sold (demanded) multiplied by the price at which it is sold.
marginal revenue
The change in total revenue which results from the sale of one additional unit of a firm’s product; equal to the change in total revenue divided by the change in the quantity of the product sold.
break-even point
The point at which total revenue and total cost are equal. At break-even output, the firm makes only a normal profit.
MR = MC rule
A firm will maximize its profit (or minimize its losses) by producing that output at which marginal revenue and marginal cost are equal provided product price is equal to or greater than average variable cost.
short-run supply curve
A supply curve which shows the quantity of a product a firm in a purely competitive industry will offer to sell at various prices in the short run; the portion of the firm’s short-run marginal cost curve which lies above its average variable cost curve.
long-run supply curve
A schedule or curve showing the prices at which a purely competitive industry will make various quantities of the product available in the long run.
constant-cost industry
An industry in which expansion or contraction will not affect resource prices and therefore production costsGraphically, it means the entry or exit of firms does not shift the long-run ATC curverves of individual firms
Occurs when the industry's demand for resources is small in relation to the total demand for those resources
increasing-cost industry
An industry in which expansion through the entry of new firms increases the prices firms in the industry must pay for resources and therefore increases their production costs.
decreasing-cost industry
An industry in which expansion through the entry of firms decreases the prices firms in the industry must pay for resources and therefore decreases their production costs.
productive efficiency
The production of a good in the least costly way; occurs when production takes place at the output at which average total cost is a minimum and at which marginal product per dollar’s worth of input is the same for all inputs.
allocative efficiency
The apportionment of resources among firms and industries to obtain the production of the products most wanted by society (consumers); the output of each product at which its marginal cost and price or marginal benefit are equal.