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Pure Competition
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A large number of suppliers who offer very similar products.
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Pure Monopoly
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A market in which there is only one supplier of a unique product with no close substitutes.
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Monopolistic Competition
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A market structure in which many companies sell products that are similar but not identical.
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Oligopoly
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A degree of competition in which just a few sellers dominate the market.
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Imperfect Competition
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A form of competition in which many firms sell slightly differentiated products; the most prevalent form of competition in America today.
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Price Taker
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A firms that accepts market price as a given and has no ability to influence price. Firms operating in perfect competition are price takers.
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Average Revenue
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Total revenue divided by the quantity sold.
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Total Revenue
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Price x Quantity
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Marginal Revenue
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The extra revenue from the sale of one additional unit of output,
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Break-even Point
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The point at which the money from product sales equals the costs of making and distributing the product.
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MR = MC Rule
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The principle that a firm will maximize its profit (or minimize its losses) by producing the output at which marginal revenue and marginal cost are equal, provided product price is equal to or greater than average variable cost.
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Short-run Supply Curve
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A curve showing the relationship between the market price of a product and the quantity of output supplied by a firm in the short run.
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