ECON Chapter 6 Notes.txt

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ECON Chapter 6 Notes.txt
2012-09-26 11:07:58
ECON Chapter

ISU ECON 1100 Chapter 6
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  1. Define market structure.
    The number and relative size of firms in an industry.
  2. What is a competitive firm?
    A firm without market power, with no ability to alter the market price of the goods it produces.
  3. What is competitive market?
    A market in which no buyer or seller has market power.
  4. Define a monopoly.
    A firm that produces the entire market supply of a particular good or service
  5. What is market power?
    The ability to alter the market price of a good or service
  6. What is the production decision?
    The selection of the short-run rate of output with existing plant and equipment.
  7. What is the total revenue?
    The price of a product multiplied by the quantity sold in a given time period, PXQ.
  8. Define marginal cost (MC)
    The increase in total costs associated with a one-unit increase in production.
  9. What is the competitive profit maximization rule?
    Produce at that rate of output where price equals marginal costs.
  10. What is supply?
    The ability and willingness to sell (produce) specific quantities of a good at alternative prices in a given time period.
  11. What is market supply?
    The total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period.
  12. What is the equilibrium price?
    The price at which the quantity of a good demanded in a given time period equals the quantity supplied.
  13. What is a barrier to entry?
    Obstacles that make it diffifult or impossible for would be producers to enter a particular market, e.g., patents.
  14. What are market mechanism?
    The use of market prices and sales to signle desired outputs or resources allocations.