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Market Structures flashcards
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- What is meant by “Perfect competition” in this lesson?Competitive markets
- The benchmark assumes many small buyers and sellers, homogeneous products, and low entry barriers.
- What is meant by “Price taker” in this lesson?Competitive markets
- A price taker accepts the prevailing market price rather than individually setting it.
- What is meant by “Homogeneous product” in this lesson?Competitive markets
- A homogeneous product is treated as equivalent across suppliers within the model.
- What is meant by “Economic profit” in this lesson?Competitive markets
- Economic profit subtracts explicit costs and opportunity costs from revenue.
- What is meant by “Long-run entry response” in this lesson?Competitive markets
- In the competitive model, persistent positive economic profits can attract entry.
- What is meant by “Allocative efficiency” in this lesson?Competitive markets
- Allocative efficiency in the benchmark matches marginal social benefit with marginal social cost under its assumptions.
- What is meant by “Monopoly” in this lesson?Monopoly and market power
- A monopoly has one supplier in a defined market with substantial entry barriers.
- What is meant by “Market power” in this lesson?Monopoly and market power
- Market power is the ability to influence price or terms rather than accept them passively.
- What is meant by “Oligopoly” in this lesson?Monopoly and market power
- An oligopoly has a small number of major suppliers with strategically interdependent choices.
- What is meant by “Natural monopoly” in this lesson?Monopoly and market power
- A natural monopoly can arise when one firm can serve the relevant market at lower cost than multiple firms.
- What is meant by “Market definition” in this lesson?Monopoly and market power
- Market definition specifies relevant products and geography for assessing competition.
- What is meant by “Antitrust purpose” in this lesson?Monopoly and market power
- Antitrust policy addresses anticompetitive conduct and market arrangements under applicable law.
- What is meant by “Externality” in this lesson?Externalities and public goods
- An externality is a cost or benefit affecting others that is not fully reflected in the transaction.
- What is meant by “Negative externality” in this lesson?Externalities and public goods
- A negative externality imposes an uncompensated external cost.
- What is meant by “Positive externality” in this lesson?Externalities and public goods
- A positive externality provides an external benefit.
- What is meant by “Public good” in this lesson?Externalities and public goods
- A pure public good is nonrival and nonexcludable.
- What is meant by “Free-rider problem” in this lesson?Externalities and public goods
- Free riding occurs when people benefit without contributing, weakening voluntary funding incentives.
- What is meant by “Common-pool resource” in this lesson?Externalities and public goods
- A common-pool resource is rival but difficult to exclude users from.