Market Structures
This market structure is characterized by many firms selling identical products with easy entry and exit from the market.
What is perfect competition?
The law of demand states that as the price of a good increases, the quantity demanded will do what?
What is decrease?
This cost does not change with the level of output and must be paid even if no production occurs.
What is a fixed cost?
When the quantity demanded of a good responds greater to a change in price, the demand for that good is said to be what?
What is elastic?
This is the additional satisfaction or benefit derived from consuming one more unit of a good or service.
What is marginal utility?
This market structure is dominated by a single firm that controls the entire supply of a good or service.
What is a monopoly?
When there is an increase in the price of a substitute good, the demand for the original good typically does what?
What is increase?
This is the total cost of production that varies depending on the level of output.
What is a variable cost?
This type of elasticity measures how the quantity demanded of one good responds to a change in the price of another good.
What is cross-price elasticity?
This principle states that as more units of a good are consumed, the less each new unit of that good will be beneficial.
What is the law of diminishing marginal utility?
In this market structure, a few firms dominate the industry, and each one has some control over the price of its product.
What is an oligopoly?
This occurs when the quantity supplied of a good exceeds the quantity demanded at a given price.
What is a surplus?
The additional cost of producing one more unit of a good is called what?
What is marginal cost?
If a 1% increase in the price of a good leads to a 1% decrease in quantity demanded, the demand is considered what type of elasticity?
What is unit elastic?
The total amount of benefit from any amount of a good.
What is total utility?
This market structure exists when a firm sells products that are similar but differentiated in some way, allowing for some degree of pricing power.
What is monopolistic competition?
The point where the quantity demanded equals the quantity supplied is known as what?
What is equilibrium?
This term refers to the total revenue minus the total cost.
What is profit?
A good for which the quantity demanded increases as income increases is known as what type of good?
What is a normal good?
This term describes the maximum amount a consumer is spending for a good or service, based on the perceived benefit.
What is willingness to pay?
This term refers to a situation where firms in an oligopoly cooperate to set prices or output levels, effectively acting as a monopoly.
What is collusion?
A change in the price of a good leads to a equal change in the quantity demanded, which is referred to as what type of demand elasticity?
What is unitary elastic demand?
This curve shows the relationship between the quantity of output a firm produces and the total cost of production.
What is the cost curve?
When the percentage change in quantity demanded is less than the percentage change in price, the demand for the good is considered what?
What is inelastic?
This occurs when the market does not allocate resources efficiently, often due to externalities or public goods.
What is market failure?