15 terms

AP Economics Chapters 14-17

competitive market
a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker
average revenue
total revenue divided by the quantity sold
marginal revenue
the change in total revenue from an additional unit sold
sunk cost
a cost that has already been committed and cannot be recovered
a firm that is the sole seller of a product without close substitutes
natural monopoly
a monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms
price discrimination
the business practice of selling the same good at different prices to different customers
a market structure in which only a few sellers offer similar or identical products
monopolistic competition
a market structure in which many firms sell products that are similar but not identical
an agreement among firms in a market about quantities to produce or prices to charge
a group of firms acting in unison
Nash equilibrium
a situation in which economic participants interacting with one another each choose their best strategy given the strategies that all the others have chosen
game theory
the study of how people behave in strategic situations
prisoners' dilemma
a particular "game" between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial
dominant strategy
a strategy that is best for a player in a game regardless of the strategies chosen by the other players