ECON 402 Lecture Notes - Lecture 2: Marginal Revenue, Imperfect Competition, Perfect Competition
Document Summary
Average revenue: the average price charged by the firm and is equal to total revenue/quantity demanded. Marginal revenue: the change in revenue from selling one more unit. Profit maximization: the output level at which the firm generates the highest profit. Marginal profit: the profit made on the last unit and is equal to the marginal revenue minus the marginal cost. Market structure: major competitive structures of a particular market place: Perfect competition is a highly competitive marketplace. Imperfect competition is a highly competitive marketplace where firms may use product differentiation. Oligopoly: is a market that consists of a small number of large players. Monopoly is a marketplace supplied by only one competitor. Perfect competition is characterized by the following structure: Price taker: a firm that accepts the market price. Accounting profits: revenues less than raw material costs, wages, and depriciation. Economic profits: revenues less the costs of all factors of production.