| Own-price elasticity of demand | Responsiveness of quantity demanded to a change in own price; EPxd=%ΔPx%ΔQxd |
| Income elasticity of demand | Sensitivity of quantity demanded to a change in income |
| Cross-price elasticity of demand | Sensitivity of quantity demanded to a change in the price of another good |
| Normal goods | Goods for which demand increases as income increases (income elasticity > 0) |
| Inferior goods | Goods for which demand decreases as income increases (income elasticity < 0) |
| Giffen goods | Inferior goods where income effect dominates substitution effect → upward-sloping demand |
| Veblen goods | Goods where higher price increases desirability (luxury/status goods) |
| Substitution effect | Change in demand due to relative price change |
| Income effect | Change in demand due to change in real income (purchasing power) |
| Diminishing marginal returns | Adding more of one input (holding others constant) eventually decreases marginal product |
| Total fixed cost (TFC) | Costs that do not change with production level |
| Total variable cost (TVC) | Costs that rise with increased production |
| Marginal cost (MC) | Increase in total cost from producing one more unit |
| Average total cost (ATC) | Total cost per unit of output |
| Average variable cost (AVC) | Variable cost per unit of output |
| Total revenue (TR) | Sum of price times quantity for all units sold |
| Marginal revenue (MR) | Increase in total revenue from selling one more unit |
| Breakeven point | Output level where TR=TC (i.e., AR=ATC); zero economic profit |
| Shutdown point | Output level where TR=TVC (i.e., AR=AVC) |
| Economies of scale | Increasing output reduces average costs (LRAC slopes downward) |
| Diseconomies of scale | Increasing output raises average costs (LRAC slopes upward) |
| Minimum efficient scale | Output level at which LRAC reaches its minimum |
| Perfect competition | Market with many firms, homogeneous products, no pricing power, very low barriers |
| Monopolistic competition | Market with many firms, differentiated products, some pricing power, low barriers |
| Oligopoly | Market with few firms, interdependent pricing, high barriers to entry |
| Monopoly | Single seller, no close substitutes, significant pricing power, very high barriers |
| Kinked demand curve model | Oligopoly model assuming competitors match price decreases but not increases |
| Cournot model | Duopoly model where firms compete on quantity simultaneously |
| Nash equilibrium | No firm can improve profit by unilaterally changing strategy |
| Stackelberg model | Oligopoly model where dominant firm sets price/quantity first |
| Collusion | Agreement among competitors to fix prices or output |
| Price discrimination | Charging different prices to different customers for the same product |
| Natural monopoly | Single firm can supply entire market at lower cost than multiple firms |
| Consumer surplus | Difference between willingness to pay and market price |
| Producer surplus | Difference between market price and minimum price seller is willing to accept |
| Deadweight loss | Loss of total surplus due to market inefficiency (e.g., monopoly) |
| N-firm concentration ratio | Sum of market shares of N largest firms in an industry |
| Herfindahl-Hirschman Index (HHI) | Sum of squared market shares of all firms in an industry |
| Quasi-fixed cost | Fixed cost that rises if output increases beyond a specified quantity |
| Economic profit | Revenue minus economic cost (includes opportunity cost) |
| Accounting profit | Revenue minus accounting cost (explicit costs only) |