Term
| In a perfectly competitive market, all producers _______ meaning they don't believe they can influence the price (take market price as given) |
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Definition
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| Some firms have ______, meaning they can influence market prices |
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Definition
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Term
| The _________ is the sum of the individual firm's supply curves |
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Definition
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Term
| Producers are ______, and they are ______ |
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Definition
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Term
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Definition
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| New firms can easily enter and existing firms can easily exit |
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Definition
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Term
| 3 perfectly competitive markets |
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Definition
1) agricultural commodities
2) stock exchanges
3) computer memory |
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| 3 nowhere near perfectly competitive markets |
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Definition
1) mobile telephony in the US
2) automobiles
3) hospitals |
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Term
| For firms in competitive markets, the key decision is _________ |
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Definition
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Term
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Definition
| revenue from selling one more unit of a good |
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Definition
| cost of making one more unit of a good |
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Term
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Definition
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Term
| the optimal output level is where ________ |
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Definition
| marginal revenue equals marginal cost (MR = MC) |
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Term
| for a firm in a perfectly competitive industry, ____________ |
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Definition
| marginal revenue is equal to price (MR = P) |
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Term
| in perfectly competitive industries, ___________ |
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Definition
| firms produce where price equals marginal cost (P = MC) |
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Term
| in the short run, sellers will choose to produce if _______ |
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Definition
Price is greater than or equal to minimum average variable cost
price >= min(AVC) |
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Term
| minimum average variable cost (AVC) is called the _______ |
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Definition
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Term
| individual firm's short-run supply curve is the ____, above the ________ |
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Definition
| marginal cost curve, minimum average variable cost |
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Term
| minimum average total cost (ATC) is the _______ |
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Definition
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Term
| in the long run, if P < min(ATC) then firms will ____ |
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Definition
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Term
| ITLR, if P > min(ATC) then firms will ____ |
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Definition
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Term
| higher prices in a market => ____ => ____ |
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Definition
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Term
| a long-run equilibrium is a point at which: |
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Definition
- Quantity supplied equals quantity demanded
- no new firms want to enter or existing exit |
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Term
| _______ -> produce up to point where MR = MC |
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Definition
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Term
| additional output is sold, generating additional revenue |
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Definition
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Term
| selling more output will reduce market price, so all output will be sold at a lower price than before |
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Definition
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Term
| firms in competitive markets: (2 things) |
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Definition
- charge price = market price
- make zero economic profit |
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Definition
- charge price above marginal cost
- make positive economic profit |
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Term
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Definition
| the practice of selling an identical product at different prices to different buyers |
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Term
| Hirschman-Herfindahl Index |
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Definition
| sum of all firms' squared market shares |
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Term
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Definition
| a strategy that's best no matter what the rival player chooses to do |
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Term
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Definition
| set of strategies such that erey player's strategy is a best response to other players' strategies |
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