Marcoeconomics Ch 12-16,19, 20

Front 1

Price-taking producer

Back 1

a proucer whose actions have no efect on the market of the good or service it sells

Front 2

Price-taking consumer

Back 2

a consumer whose actions have no effect on the market price of the good or service he or she buys

Front 3

perfectly competitve industry

Back 3

an industry in which all producers are price-takers

Front 4

market share

Back 4

the fraction of the total industry output accounted for by a given producer's output

Front 5

standardized product

Back 5

output of different producers regarded by consumers as the same good; also referred to as a commodity

Front 6

perfectly competitive market

Back 6

a market in which all participants are price-takers

Front 7

commodity

Back 7

output of different producers regarded by consumers as the sam good; also referred to as a standardized product

Front 8

free entry and exit

Back 8

describes an industry that potential producers can easily enter or current producers can leave

Front 9

marginal revenue

Back 9

describes an industry that potential producers can easily enter or current producers can leave

Front 10

marginal revenue

Back 10

the change in total revenue generated by an additional unit of output

Front 11

optimal output rule

Back 11

profit is maximized by producing the quantity of output at which the marginal revenue of the last unit produced

Front 12

price-taking firm's optimal output rule

Back 12

the profit of a price-taking firm is maximized by producing the quantity of output at which the market price is equal to the marginal cost of the last unit produced.

Front 13

marginal revenue curve

Back 13

a graphical representation showing how marginal revenue varies as output varies

Front 14

break-even price

Back 14

the market price at which a firm earns zero profits

Front 15

shut-down price

Back 15

the price at which a firm ceases production in the short run because the market price has fallen below the minimum average variabl cost

Front 16

short-run individual supply curve

Back 16

a graphical representation that shows how an individual producer's profit-maximizing output quantity depends on the market price, taking fixed cost as given

Front 17

industry supply curve

Back 17

a graphical representation that shows the relationship b/w the price of a good and the total output of the industry for that good

Front 18

short-run industry supply curve

Back 18

a graphical representation that shows how the quantity supplied by an industry depends on the market price, given a fixed number of producers

Front 19

short-run market equilibrium

Back 19

market equilibrium balance that results when the quantity supplied equals the quantity demanded, taking the number of producers as given

Front 20

long-run market equilibrium

Back 20

market equilibrium balance which, given suffieient time for producers to enter or exit an industry, the quantity supplied equals the quantity demanded

Front 21

long-run supply curve

Back 21

a graphical representation that shows how quantity supplied responds to price once producers have had time to enter or exit the industry

Front 22

monopolist

Back 22

a firm that is the only producer of a good that has no close substitues

Front 23

monopoly

Back 23

an industry controlled by a monopolist

Front 24

barrier to entry

Back 24

something that prevents other firms from entering an industry. Crucial in protecting the profits of a monopolist. There are 4 types of barriers to entry: control over scarce resources or inputs, increasing returns to scale, technological superiority, and government-created barriers such as licenses

Front 25

natural monopoly

Back 25

a monopoly that exist when increasing returns to scale provide a large cost advantage to having all output produced by a single firm

Front 26

patent

Back 26

a temporary monopoly given by the government to an inventor for the use or sale of an invention

Front 27

market power

Back 27

the ability of a producer to raise prices

Front 28

copyright

Back 28

the exclusive legal right of the creator of a literary or artistic work to profit from that work; like a patent, it is a temporary monopoly

Front 29

public ownership

Back 29

when goods are supplied by the government or by a firm owned by the government to protect the interest of the consumer in response to natural monopoly

Front 30

price regulation

Back 30

a limitation on the price a monopolist is allowed to charge

Front 31

single-price monopolist

Back 31

a monopolist that offers its product to all consumers at the same price

Front 32

price discrimination

Back 32

charging differnet prices to different consumers for the same good

Front 33

perfect price discrimination

Back 33

when a monopolist charges each consumer the maximum that the consumer is willing to pay

Front 34

monopolistic competition

Back 34

a market structure in which there are many competing producers in an industry, each producer sells a differentiated product, and there is free entry and eit into and from the industry in the long run

Front 35

zero-profit equilibrium

Back 35

an eeconomic balance in which each firm makes zero profit at its profit-maximizing quantity

Front 36

excess capacity

Back 36

when firms produce less than the output at which average total cost is minimized; characteristic of monopolistically competitve firms

Front 37

brand name

Back 37

a name owned by a particular firm that distinguishes its products from those of other firms

Front 38

oligopoly

Back 38

an industry with only a small number of producers

Front 39

oligopolist

Back 39

a firm in an industry with only a small number of producers

Front 40

imperfect competition

Back 40

a market structure in which no firm is a monopolist, but producers nonetheless have market power they can use to affect market prices

Front 41

duopoly

Back 41

an oligopoly consisting of only two firms

Front 42

duopolist

Back 42

one of the two firms in duopoly

Front 43

price war

Back 43

a collapse of prices when tacit collusion breaks down

Front 44

product differentiation

Back 44

the attempt by firms to convince buyers that their products are different from those of other firms in the industry. If firms can so convince buyers, they can charge a higher price

Front 45

price leadership

Back 45

a pattern of behavior in which on firm sets its price and other firms in the industry follow

Front 46

nonprice competition

Back 46

competition in areas other than price to increase sale, such as new product features and advertising; especially engaged in by firms that have a tacit understanding not to compete on price

Front 47

duopolist

Back 47

one of the two firms in duopoly

Front 48

price war

Back 48

a collapse of prices when tacit collusion breaks down

Front 49

product differentiation

Back 49

the attempt by firms to convince buyers that their products are different from those of other firms in the industry. If firms can so convince buyers, they can charge a higher price

Front 50

price leadership

Back 50

a pattern of behavior in which on firm sets its price and other firms in the industry follow

Front 51

nonprice competition

Back 51

competition in areas other than price to increase sale, such as new product features and advertising; especially engaged in by firms that have a tacit understanding not to compete on price