AP®︎ Microeconomics: Topic 4.1 Flashcards

Market structures where firms have price-setting power and price exceeds marginal cost.

Monopoly: one seller; oligopoly: few dominant sellers; monopolistic competition: many sellers with differentiated products; monopsony: one buyer in a factor market.

Output is allocatively inefficient because consumers pay a price greater than marginal cost.

Large upfront expenses deter new firms from entering because startup is too costly.

Government protections like patents or licenses give firms exclusive rights and block competitors.

Control of essential inputs prevents rivals from producing and entering the market.

Large firms produce at lower average cost, making it hard for smaller entrants to compete.

Demand slopes downward, and marginal revenue lies below demand because lowering price affects all units sold.

Obstacles like high startup costs, legal restrictions, and resource control discourage new firms from entering.

Firms sell distinct products and compete through advertising, quality, or service instead of price.

The loss of total surplus caused when output is below the socially efficient level.