Vous êtes sur la page 1sur 2

Ch.

8 Pure Competition in the Short Run


Study online at quizlet.com/_4lhyy
1.

average revenue

Total revenue from the sale of a product divided by the quantity of the product sold (demanded); equal to the price at which the product is sold when all units of the product are sold at the same price. An output at which a firm makes a normal profit (total revenue = total cost) but not an economic profit. Economists group industries into four models based on their market structures: (a) pure BLANK, (b) pure monopoly, (c) BLANK competition, and (d) BLANK. BLANK firms choose to operate rather than shut down whenever price is greater than average variable cost but less than average total cost, because in those situations, revenues will always exceed variable costs. The amount by which revenues exceed variable costs can be used to help pay down some of the firms fixed costs. Thus, the firm loses less money by operating (and paying down some of its fixed costs) than it would if it shut down (in which case it would suffer a loss equal to the full amount of its fixed costs). We can analyze short-run profit maximization by a BLANK firm by comparing total revenue and total cost or by applying marginal analysis. A firm maximizes its short-run profit by producing the output at which total revenue exceeds total cost by the greatest amount. A purely BLANK industry consists of a large number of independent firms producing a standardized product. There is the assumption that firms and resources are mobile among different industries. A competitive firm shuts down production at least temporarily if price is less than minimum average variable cost, because in those situations, producing any amount of output will always result in variable costs exceeding revenues. Shutting down therefore results in a smaller loss, because the firm will lose only its BLANKED cost, whereas, if it operated, it would lose its fixed cost plus whatever money is lost due to variable costs exceeding revenues. All market structures except pure competition; includes monopoly, monopolistic competition, and oligopoly. The change in total revenue that results from the sale of 1 additional unit of a firm's product; equal to the change in total revenue divided by the change in the quantity of the product sold.

10.

monopolistic competition

A market structure in which many firms sell a differentiated product, into which entry is relatively easy, in which the firm has some control over its product price, and in which there is considerable nonprice competition. The principle that a firm will maximize its profit (or minimize its losses) by producing the output at which marginal revenue and marginal cost are equal, provided product price is equal to or greater than average variable cost. A market structure in which a few firms sell either a standardized or differentiated product, into which entry is difficult, in which the firm has limited control over product price because of mutual interdependence (except when there is collusion among firms), and in which there is typically nonprice competition. Provided BLANK exceeds minimum average variable cost, a competitive firm maximizes profit or minimizes loss in the short run by producing the output at which price or marginal revenue equals marginal cost. In a competitive industry, no single firm can influence market BLANK. This means that the firm's demand curve is perfectly elastic and price equals marginal revenue. A seller (or buyer) that is unable to affect the price at which a product or resource sells by changing the amount it sells (or buys). A market structure in which a very large number of firms sells a standardized product, into which entry is very easy, in which the individual seller has no control over the product price, and in which there is no nonprice competition; a market characterized by a very large number of buyers and sellers. A market structure in which one firm sells a unique product, into which entry is blocked, in which the single firm has considerable control over product price, and in which nonprice competition may or may not be found. A supply curve that shows the quantity of a product a firm in a purely competitive industry will offer to sell at various prices in the short run; the portion of the firm's short-run marginal cost curve that lies above its average-variable-cost curve.

2.

break-even point competition, monopolistic, oligopoly Competitive

11.

MR = MC rule

3.

12.

oligopoly

4.

13.

price

14.

price

5.

competitive

15.

price taker

6.

competitive

16.

pure competition

7.

fixed

17.

pure monopoly

18.

short-run supply curve

8.

imperfect competition marginal revenue

9.

19.

shutting down

If price is less than minimum average variable cost, a competitive firm minimizes its loss by BLANKING BLANK. If price is greater than average variable cost but is less than average total cost, a competitive firm minimizes its loss by producing the P = MC amount of output. If price also exceeds average total cost, the firm maximizes its economic profit at the P = MC amount of output. Applying the MR (= P) = MC rule at various possible market prices leads to the conclusion that the segment of the firm's shortrun marginal-cost curve that lies above the firm's average-variable-cost curve is its short-run BLANK curve. The total number of dollars received by a firm (or firms) from the sale of a product; equal to the total expenditures for the product produced by the firm (or firms); equal to the quantity sold (demanded) multiplied by the price at which it is sold.

20.

supply total revenue

21.

Vous aimerez peut-être aussi