The use of an uneconomical combination of resources to produce goods and
services that are not intensely desired
relative to their opportunity cost.
Obstacles that limit the freedom of potential rivals to enter an
industry.
A term that denotes rivalry or competitiveness between or among parties
(for example, producers or input suppliers), each of which seeks
to deliver a better deal to buyers when quality, price, and
product information are all considdered. Competing implies a
lack of collusion among sellers.
An industry for which factor prices and costs of production remain
constant as market output is expanded. Thus, the long run market
supply curve is horizontal.
Industries for which costs of production decline as the industry expands.
The market supply is therefore inversely related to price. Such
industries are atypical.
The sale of a firm's assets, and its permanent xit from the market. By
going out of business, a firm is able to avoid fixed cost, which
would continue during a shutdown.
A product of one firm that is identical to the product of every other
firm in the industry. Consumers see no difference in units of
the product offered by alternative sellers.
Industries for which costs of production rise as the industry output is
expanded. Thus, the long run market supply is directly related
to price.
The incremental change in total revenue derived from the sale of one
additional unit of a product.
Sellers who must take the market price in order to sell their product.
Because each price taker's output is small relative to the total
market, price takers can sell all of their output at the market
price, but are unable to sell any of their
output at a price higher than the market price. Thus,
they facce a horizontal demand curve.
A model of industrial struture characterized by a large number of small
firms producing a homogeneous product in an industry (market
area) that permits complete freedom of entry and exit.
A tempoary halt in the operation of a business. The firm does not sell
its assets. Its variable cost will be eliminated, but the firm's
fixed costs will continue. The shutdown firm anticipates a
return to operation in the future.
