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MICRO CH8

Terms in this set (15)

Characteristics of Market Structures: (4)
...
Perfect Competition:
Number of firms: Very large number
Entry Condition: Easy
Product Type: Standardized
Monopoly:
Number of firms: One
Entry Condition: No entry possible
Product Type: Only one product
Monopolistic competition:
Number of firms: Large Number
Entry Condition: Easy
Product Type: Differentiated
Oligopoly:
Number of firms: Few
Entry Condition: Impeded
Product Type: Standardized or differentiated.
A firm's decision to supply a good or service
depends on expected profit.
The addition to a business firm's total receipts (revenue) that comes from selling one more unit of output is
marginal revenue.
To produce where marginal cost is equal to marginal revenue is called
the profit-maximizing rule
The additional cost a firm acquires from selling an extra unit of output is
marginal cost.
In general, the two extreme cases of market structure models are represented by
perfect competition and monopoly.
Firms operating in a perfectly competitive market are price takers because
they are unable to set a price that differs from the market price without losing profit.
If an industry has no barriers to entry, no product promotion strategy, a standardized product type, and a very large number of firms operating within it, the industry can be said to have
perfect competition.
Monopoly is a market structure
in which there is just one firm and entry by other firms is not possible.
A(n) __________ may offer products that are either differentiated or nondifferentiated.
oligopolistic firm
Regardless of market structure, firms maximize profits where
MR=MC
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