Key Terms

Question

Price-taking firm
Price-taking consumer
Perfectly competitive market
Perfectly competitive industry
Market share
Standardized product
Commodity
Free entry and exit
Monopolist
Monopoly
Barrier to entry
Natural monopoly
Patent
Copyright
Oligopoly
Oligopolist
Imperfect competition
Herfindahl–Hirschman Index
Monopolistic competition
Marginal revenue
Optimal output rule
Price-taking firm’s optimal output rule
Marginal revenue curve
Break-even price
Shut-down price
Industry supply curve
Short-run industry supply curve
Short-run market equilibrium
Long-run market equilibrium
Long-run industry supply curve
describes an industry that potential producers can easily enter or current producers can leave.
a graphical representation that shows the relationship between the price of a good and the total output of the industry for that good.
a market structure in which there are many competing firms in an industry, each firm sells a differentiated product, and there is free entry into and exit from the industry in the long run.
a firm that is the only producer of a good that has no close substitutes.
the fraction of the total industry output accounted for by a firm’s output.
the square of each firm’s share of market sales summed over the industry. It gives a picture of the industry market structure.
a monopoly that exists when increasing returns to scale provide a large cost advantage to having all output produced by a single firm.
a consumer whose actions have no effect on the market price of the good or service he or she buys.
a graphical representation showing how marginal revenue varies as output varies.
output of different producers regarded by consumers as the same good; also referred to as a commodity.
an economic balance that results when the quantity supplied equals the quantity demanded, taking the number of producers as given.
the price at which a firm ceases production in the short run because the price has fallen below the minimum average variable cost.
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.
a firm whose actions have no effect on the market price of the good or service it sells.
a graphical representation that shows how quantity supplied responds to price once producers have had time to enter or exit the industry.
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.
a market in which all market participants are price-takers.
an industry controlled by a monopolist.
a graphical representation that shows how the quantity supplied by an industry depends on the market price, given a fixed number of producers.
profit is maximized by producing the quantity of output at which the marginal revenue of the last unit produced is equal to its marginal cost.
an economic balance in which, given sufficient time for producers to enter or exit an industry, the quantity supplied equals the quantity demanded.
something that prevents other firms from entering an industry. Crucial in protecting the profits of a monopolist. There are four types of barriers to entry: control over scarce resources or inputs, increasing returns to scale, technological superiority, and government-created barriers such as licenses.
a market structure in which no firm is a monopolist, but producers nonetheless have market power they can use to affect market prices.
a temporary monopoly given by the government to an inventor for the use or sale of an invention.
output of different producers regarded by consumers as the same good; also referred to as a standardized product.
the market price at which a firm earns zero profits.
an industry with only a small number of producers.
a firm in an industry with only a small number of producers.
the change in total revenue generated by an additional unit of output.
an industry in which all producers are price-takers.

Price-taking firm

Price-taking consumer

Perfectly competitive market

Perfectly competitive industry

Market share

Standardized product

Commodity

Free entry and exit

Monopolist

Monopoly

Barrier to entry

Natural monopoly

Patent

Copyright

Oligopoly

Oligopolist

Imperfect competition

Herfindahl–Hirschman Index

Monopolistic competition

Marginal revenue

Optimal output rule

Price-taking firm’s optimal output rule

Marginal revenue curve

Break-even price

Shut-down price

Industry supply curve

Short-run industry supply curve

Short-run market equilibrium

Long-run market equilibrium

Long-run industry supply curve