| A | B |
|---|
| Allocative efficiency | The situation that occurs when no resources are wasted - when no one can be made better off without making someone else worse off |
| Average revenue | Total revenue divided by the quantity sold |
| Break-even point | The output level at which total revenue equals total cost (and at which economic profit is zero) |
| Marginal revenue | The change in total revenue resulting from a one unit change in the quantity sold |
| Marginal social benefit | The dollar value of the benefit from one additional unit of consumption, including the benefit to the buyer and any indirect benefits accruing to any other member of society |
| Marginal social cost | The cost of producing one additional unit of output, including both the costs borne by the producer and any other costs indirectly incurred by any other member of society. It is the marginal cost incurred by theproducer of a good, together with any marginal costs imposed as an externality on others |
| Perfect competition | A state that occurs in markets in which the following conditions exist: a large number of firms sell an identical product; there are many buyers; there are no restrictions on entry; existing firms have no advantage over potential new entrants; and all firms and buyers are fully informed about the prices of each and every firm |
| Total revenue | The amount receives from the sale of a product. It equals the price of the product multiplied by the quantity sold |
| External benefits | Those benefits from a product accruing to people in other countries |
| External costs | Those costs of a product borne by people other than its producer |
| External diseconomies | Factors outside the control of a firm that raise its costs as industry output rises |
| Exteranl economies | Factors beyond the control of a firm that lower its costs as industry output rises |
| Price taker | A firm that cannot influence the price of its product |
| Short-run supply curve | The supply curve that describes the response of the quantity supplied to a change in price when only some of the technologically possible adjustments to the production process have been made |
| Barriers to entry | Restrictions on the entry of new firms into the industry |
| Economies of scope | Decreases in average total cost made possible by increasing the number of different products produced |
| Monopoly | A market type in which there is a sole supplier of a good, service or resource that has no close substitutes and in which there is a barrier preventing the entry of new firms into the industry |
| Perfect price discrimination | The practice of charging each consumer the maximum price that he or she is willing to pay for each unit bought |
| Producer surplus | The difference between a producer's total revenue and the opportunity cost of production |
| Single-price monopoly | A monopoly that charges the same price for each unit of output |
