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Chapter 11

AGR 110 Chapter Notes - Chapter 11: Market Power, Demand Curve, Oligopoly


Department
Agriculture
Course Code
AGR 110
Professor
Michelle Kibler
Chapter
11

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Chapter 11 Vocabulary
Market Power
The ability to affect the price of output
A firm with market power faces a downward-sloping demand curve
Market Structure
The organization of an industry, typically defined by the number of firms in
an industry
Monopoly
A market structure characterized by a single seller
The firm is the industry
Price Maker
A firm characterized by a market power, or the ability to influence the
output price
A price-making firm faces a downward-sloping demand curve
Price Taker
A firm so small relative to the industry that the price of output is fixed and
given, no matter how large of how small the quantity of output it sells
Natural Monopoly
A situation where a single firm has large fixed costs, making it the most
efficient (lowest cost) for production to be considered in a single firm
Monopolistic Competition
A market structure defined by:
1. Many sellers
2. A product with close, but differentiated, substitutes
3. Some freedom of entry and exit
4. Some availability of knowledge and information
Barriers to Entry and Exit
Legal or economic barriers that hinder or prevent a new firm from entering
or exiting and industry
Nonprice Competition
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