Market Structures
This type of firm is a price taker and operates in a market where products are identical and competitors are numerous.
What is a perfectly competitive firm?
This occurs in a market when the quantity demanded equals the quantity supplied, leaving no surplus or shortage.
What is market equilibrium?
This economic metric is calculated by subtracting total costs from total revenues.
What is profit?
This essential difference separates a market economy from a command economy regarding resource allocation.
What is the invisible hand or market supply and demand
This fundamental condition means that society has fewer productive resources available than the unlimited wants of people.
What is scarcity?
This condition distinguishes monopolistic competition from perfect competition.
What is product differentiation?
According to the laws of supply and demand, a decrease in the supply of wheat with unchanged demand will have this effect on equilibrium price.
What is an increase in the equilibrium price?
These are costs that are independent of the quantity produced and remain unchanged even if output is zero.
What are fixed costs?
This economic indicator measures the total value of all final goods and services produced within a country in a given period.
What is Gross Domestic Product (GDP)?
This is the primary reason why the government, rather than private businesses, typically provides public goods like flood control.
What is the free-rider problem (those who do not pay still receive the benefits)?
This industry structure exists when a single firm controls the entire market for a product without close substitutes.
What is a monopoly?
This term describes goods like peanut butter if consumer income increases and the demand for peanut butter subsequently decreases.
What is an Inferior good?
This term describes the extra benefit or additional value gained from hiring one additional worker.
What is the marginal revenue product (MRP)?
This function of money that is demonstrated when a price tag lists an item's worth.
What is a unit of account?
These specific items are classified as goods that are both non-excludable and non-rivalrous, such as fish in the open ocean.
What are common goods (or public goods)?
This type of natural market structure arises because a single firm can supply a good or service to an entire market at a smaller cost than two or more firms.
What is a natural monopoly?
This specific type of market failure occurs when a transaction has a negative impact on a third party who does not choose to participate.
What is a negative externality?
This specific economic concept states that as successive units of a variable input are added to fixed inputs, the marginal product of the variable input eventually declines.
What is diminishing marginal returns?
This specific type of unemployment consists of workers changing jobs or searching for new ones, which exists even in a healthy economy.
What is frictional unemployment?
This describes a situation where a person benefits from a public good or event (like a community feast) without paying for it.
What is a free-rider?
In the short run, what determines whether a pure monopoly earns an economic profit?
What is revenues and costs?
If the price elasticity of supply is 1 and the price elasticity of demand is -2, this is the percentage change in quantity demanded if the price falls by 20%.
What is a 40% increase?
If a firm has a total cost of $114 for producing 3 units of output and $148 for 4 units, this is the marginal cost of producing the fourth unit.
What is $34?
When the Consumer Price Index (CPI) rises from 120 to 126 over a year, this is the exact calculated rate of inflation.
What is 5%?
If four large firms control 80 percent of a total market, economists classify this specific market structure.
What is an oligopoly?