Microeconomics Vocabulary

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Microeconomics Vocabulary

|Word |Definition | |Market |A market is any situation or place that enables the buying and selling of goods and| | |services | |Perfect Competition |Perfect competition is a market structure made up of a large number of small firms,| | |each selling homogeneous (identical) products to a large number of buyers. Perfect | | |competition also requires freedom of entry and exit for firms and perfect knowledge| | |among the firms. Perfect competition should lead to the optimum allocation of | | |resources. | |Monopoly |A monopoly is a firm that dominates the market and in the case of a pure monopoly | | |has a 100% market share (produces the entire output of the industry). A monopolist | | |will have a high degree of market power and therefore the ability to 'set' prices | |Oligopoly |Oligopoly is a market structure where a market has just a few firms. Each of the | | |firms will account for a large proportion of output. In an oligopolistic market | | |there will tend to be a high degree of interdependence between the firms as they | | |will watch carefully what the other firms are doing. | |Duopoly...
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