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ZERO-SUM GAME: A situation in which a fixed amount is divided up among the winners and losers. In a zero-sum game the wins equal the losses. Many stock market, or financial market, exchanges are zero-sum. One person buys low and sells high, while another buys high and sells low. The wealth in such transactions are merely transferred from one person to another. "Productive" market transactions, in contrast, are not zero-sum. The act of producing goods and services from resources that are consumed to satisfy wants and needs results in a net gain to society.
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Lesson 16: Perfect Competition | Unit 5: Evaluation
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Page: 27 of 28
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- Market control.
- Market control is the ability of a firm to control the price and/or quantity of the good sold.
- Most real world firms are not price takers. They have some degree of market control.
- What does this mean?
- First, because many firms in the real world have some degree of market control, they have the ability to charge a price that is a little more (or a lot more) or a little less (or a lot less) than the going market price.
- Second, real world firms with market control do not have equality between price and marginal revenue.
- Third, the inequality between price and marginal revenue means that profit-maximizing firms that equate marginal revenue and marginal cost do NOT equate price and marginal cost.
- Fourth, perfect competition is most important in evaluating the degree of inefficiency of real world firms.
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TOTAL REVENUE The revenue received by a firm for the sale of its output. Total revenue is one two bits of information a firm needs to calculate economic profit, the other is total cost. In general, total revenue is the price times quantity--the price received for selling a good times the quantity of the good sold at that price. For a perfectly competitive firm, which receives a single unchanging price for all output sold, the calculation is relatively easy. For other real world firms, that charge different prices to different buyers for different quantities, the calculation can be more complex. Two other revenue measures directly related to total revenue are average revenue and marginal revenue. Total revenue is often depicted as a total revenue curve.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time strolling around a discount warehouse buying club seeking to buy either a package of blank rewritable CDs or yellow cotton balls. Be on the lookout for poorly written technical manuals.
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The word "fiscal" is derived from a Latin word meaning "moneybag."
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"We succeed in enterprises (that) demand the positive qualities we possess, but we excel in those (that) can also make use of our defects." -- Alexis de Tocqueville, Statesman
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LRTC
Long Run Total Cost
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