Chapter 5 Micro Econ

Front 1

Characteristics of Perfect Competition

Back 1

a large number of competitors, such that no one firm can influence the price
the good a firm sells is indistinguishable from the ones its competitors sell
firms have good sales and cost forecasts
there is no legal or economic barrier to its entry into or exit from the market

Front 2

Monopoly

Back 2

The sole seller of a good or service.
Some are generated because of legal rights (patents and copyrights).
Some are utilities (gas, water, electricity etc.) that result from high fixed costs.

Front 3

Monopolistic Competition

Back 3

a situation in a market where there are many firms producing similar but not identical goods.

*Though goods of each firm are not the same thing, there all substitutes.
Example: Fast Food, high elasticity, if bk rises prices suddenly, people will just go to mcds.

Front 4

oligopolistic market

Back 4

a situation in a market where there are very few competitors.

Example: Satelite Television

Front 5

concentration ratio

Back 5

Measures the percentage of total market sales for the top firms to see what power they have in the market(from 4 firms to 100 firms).

Front 6

Normal Profit

Back 6

the level of profit that business owners could get in their next best alternative investment

*I guess average profit in a sense. If a businessman does not make this or more, he goes into a different venture.

Front 7

Economic Profit

Back 7

any profit above normal profit

*The incentive to run such a business. Making more money then average business.

Front 8

Short Run

Back 8

the period of time where we cannot change things like plant and equipment

*manfacturing. This is more about flexibility then time.

Front 9

Long Run

Back 9

the period of time where we can change things like plant and equipment

*manfacturing. This is more about flexibility then time.