AP Microeconomics: Market Structures

A calculation of total earnings that includes the explicit costs of doing business, such as depreciation, interest and taxes, but does not include implicit costs such as opportunity costs.

The fixed cost per unit of output.

Total revenue divided by quantity sold

The variable cost per unit of output.

Total revenue minus economic plus accounting costs.

Known, out of pocket, obvious costs.

Costs that do not change in the short run, like rent on a building.

Non-obvious or opportunity costs.

A period of time long enough to change the amount of any input used in production.

The additional, or incremental cost incurred from any activity, or action.

The additional revenue a firm earns from selling an additional unit of some good or service.

A period of time too short to change some inputs in the production process.

Fixed costs + variable costs.

Price X quantity sold.

The cost of inputs such as labor, that can change in value.

Total product divided by the total units of capital or labor.

The total cost divided by the total quantity of output.

The proposition that states that as more of any variable input is added to some fixed input (like a plot of land), the less of output can be obtained from that variable input.

Increases in costs stemming from a company becoming too large.

Cost savings associated with large scale production.

The point in a curve where the rate of change in the slope begins to change.

The additional, or incremental cost incurred from any activity, or action.

The additional output gained from employing one more unit of some input (same as the marginal physical product).

Losses incurred from some investment.

Total production.

The total cost of inputs that are fixed in the production process (do not change in the short run).

A curve that graphically illustrates all levels of production (price/quantity) of a given good or service.

The total cost of inputs that are variable (can change in value).

A market structure where thousands of competing firms sell a homogenous good or service.

A good where any change in price causes quantity demanded to change in an infinite manner (a horizontal demand curve).

Economic profits far exceeding what is normal in some industry.

The lowest price that can be charged for a good or service before losses begin to occur.

Total revenue equal to the explicit and implicit costs of production.

The point where the price of a good or service is equal to the minimum point on the average variable cost curve.

Is reached in production when marginal cost equals the price, which equals marginal revenue

Is reached in production when price is set where the minimum (or bottom of the) average total cost (ATC) is equal to the price, which also equals marginal revenue and demand.

A way of blocking new entrants into a market if profits are being earned (e.g., patents, trademarks and violence).

The FCC was established by the Communications Act of 1934 and is charged with regulating interstate and international communications by radio, television, wire, satellite, and cable. The FCC's jurisdiction covers the 50 states, Washington, D.C., and U.S. possessions.

A measure of how concentrated (how much, or little competition exists) an industry is.

A market structure characterized by a single seller of a unique product with no close substitutes.

A price that is set equal to a monopolist's demand curve, rather than at a level that is just equal to the cost of production.

The single buyer of some good or service, typically the single buyer of labor in some market.

Economic profits far exceeding what is normal in some industry.

Pricing a good or service at a level that creates enough revenue to pay only the variable costs of production.

Pricing a good or service at a level that creates enough revenue to pay the total cost of production.

Pricing a good or service at a level just sufficient to pay for the marginal cost of production.

Where P=ATC, monopolist will only earn normal profits.

A monopoly that is created from economies of scale - like an electric utility.

Occurs when a firm charges a different price to different groups of consumers for an identical good or service, for reasons not associated with costs.

A company that sells a good or service that is vital to the public interest (electric power) and thus faces regulations on prices and output.

Where P=MC, it is the best option for consumers since it is the highest quantity at the lowest price.

The difference between what a consumer paid for a good or service and what they were actually willing to pay for a good or service.

The loss to society's consumer surplus as a result of policies that artificially change prices or quantities.

The productivity derived from the use of some resource.

The difference between the price a producer receives and the price the producer would have produced the good or service for.

A situation where buyer's do not change their behavior much in response to price changes because they are loyal to a company's brand.

The difference between how much of a good or service is produced and how much could have been produced.

An unwritten agreement between two parties - often a source of brand name loyalty.

A market structure where a few firms enjoy some brand name loyalty.

A way of helping consumers see differences in goods or services (advertising).

An agreement among several producers setting production quotas, leading to oligopoly profits.

A merger among firms in unrelated industries.

A strategy where no matter what your rival does you are no better off or worse off from the strategy you have picked.

A firm that is incurring economic losses and is facing bankruptcy.

A theory that seeks to explain how the behavior of one person, or firm, is impacted by the behavior of another person or firm.

A merger among competing firms.

The joining of two firms.

A situation where rival individuals or rival firms cannot gain by changing their behavior.

A market structure where only a few firms dominant the sales for a good or service.

The phenomena that occurs when two agents acting together produce more than the expected outcome.

Coordination of the production process from beginning to end.

A merger among firms in the production process (a car maker buying a tire company).

A situation where thousands of firms compete to sell a homogenous product.