Terms in this set (11)
1). large number of competing firms
2). differentiated products
3). free exit/entry into or out of the industry in the long run
1). cannot control market price
2). sell an identical product
3). freedom of exist and entry
a situation in where firms can hold some control over market price
a type of monopoly that exists as a result of the high fixed costs or startup costs of operating a business in a specific industry.
the action of selling the same product at different prices to different buyers, in order to maximize sales and profits.
is a loss of economic efficiency that can occur when equilibrium for a good or service is not achieved or is not achievable
is a state of the economy in which production represents consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing.
externality (negative and positive)
is a consequence of an economic activity experienced by unrelated third parties; it can be either positive or negative. Pollution emitted by a factory that spoils the surrounding environment and affects the health of nearby residents is an example of a negative externality. The effect of a well-educated labor force on the productivity of a company is an example of a positive externality.
bargaining and agreement making in order to solve a conflict of negative externalities
a government tax charged to a firm equal to a negative externality, that is meant to levy the negative externality for social benefit
a government grant given to a firm in order to promote positive externalities that will benefit social good
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