Market Structure
Profit
Key Concepts
Government Intervention
Labor Market
100
Firms within a perfectly competitive market are this in terms of market price
What are price takers?
100
These two firms earn normal profit in the long run
What are perfectly competitive and monopolistically competitive markets?
100

The term for when firms in an oligopoly work together to set prices or output levels.

What is Collusion?

100
A government places this on a market and collects revenue on each unit sold.
What is an excise tax/per-unit tax?
100

Firms will continue to hire workers until these two curves equal each other

What are the MRP (Marginal Revenue Product) and MRC (Marginal Resource Cost) curves

200

The quantity at which MR equals MC but is not equal to Price.

What is the profit maximizing in an imperfectly competitive market (monopolistic comp, oligopoly, monopoly) - not allocatively efficient 

200

A profit-maximizing firm is experiencing marginal revenue of $10 and marginal cost of $8. What should it do?

Produce more (providing price is above AVC)

200
This is the responsiveness of quantity demanded to changes in price.
What is price elasticity of demand?
200
This is a government-imposed limit on how low a price can be charged for a product
What is a price floor?
200
This is a single buyer in a factor market.
What is a monopsonist?
300
These two curves at their lowest point are intersected by the MC curve
What are the AVC and ATC curves?
300
Monopolies earn economic profits in the long run because of this
What are high barriers to entry?
300
In oligopolies this is the best option for a firm regardless of the other firms choice
What is a dominant strategy?
300

This is an price control that results in a shortage of the good.

What is a price ceiling?

300

This is the additional cost of employing an additional unit of a factor of production.

What is marginal resourse cost?

400

The reason why competitive markets earn normal profit in the long run.

What are low barriers to entry and exit?

400

Total revenue minus explicit costs is this kind of profit

What is accounting profit?

400

When the price of one good rises and the demand for another good increases, the two goods are classified as this.

What is a substitute good?

400
This increases a firms economic profit without increasing the firms incentive to increase output.
What is a lump-sum subsidy?
400

If the market price increases, then the firm will do what with the quantity of workers it hires?

Indeterminant?

500

The reason why imperfectly competitive markets are socially inefficient in terms of quantity of output?

This occurs because firms have market power, allowing them to set prices above marginal cost (P > MC)

500

A profit maximizing firm should do this when price is lower than ATC and greater and AVC

What is continue to produce? (operating loss)

500
When the price elasticity is greater than 1 the percent quantity demand change is ______ than the percent change in price.

greater than

500

This is when regulators set a monopoly’s price equal to its marginal cost to achieve efficiency.

What is marginal cost (social optimal) pricing? P=MC

500

The employment of resources so that the marginal product per dollar spent on each resource is the same.

What is the cost-minimization rule? (mp/p = mp/p)

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