AP Microeconomics Flashcards: Introduction to Imperfectly Competitive Markets
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Review key ideas with interactive flashcards. This set includes 11 cards to help you master important concepts.
What is a monopsony?
A monopsony is a type of imperfectly competitive market structure found in factor markets.
Card 1 of 11
All Flashcards (11)
What is a monopsony?
A monopsony is a type of imperfectly competitive market structure found in factor markets.
A government grants a patent to a pharmaceutical company, giving it the sole right to produce a new drug. What does this patent represent?
This patent represents a legal barrier to entry that can sustain an imperfectly competitive market structure.
In an imperfectly competitive market, what must a firm do to sell additional units?
Assuming all else is constant, a firm in an imperfectly competitive output market must lower its price to sell additional units.
A single company owns all of the world's bauxite mines, a necessary component for aluminum. What type of barrier to entry is this?
This is an example of a barrier to entry through the exclusive ownership of key resources.
How do consumer and producer decisions reflect the inefficiency of imperfectly competitive markets?
In these markets, consumers and producers respond to prices that are above the marginal costs of production and/or marginal benefits of consumption.
What are barriers to entry?
Barriers to entry are factors that mitigate incentives for new firms to enter an industry and can sustain imperfectly competitive market structures.
What are the three types of imperfectly competitive product markets?
The three types of imperfectly competitive product markets are monopoly, oligopoly, and monopolistic competition.
List three examples of barriers to entry that can sustain imperfectly competitive markets.
Three examples are high fixed/start-up costs, legal barriers to entry, and exclusive ownership of key resources.
What is the relationship between price and marginal cost in an inefficient, imperfectly competitive market?
In these markets, price is greater than the marginal cost of production (P > MC).
How do barriers to entry, such as exclusive ownership of key resources, affect market structure?
Barriers to entry like exclusive ownership of key resources can sustain imperfectly competitive market structures by preventing new firms from entering the industry.
A new car manufacturer faces billions in costs for factories and equipment before selling a single vehicle. What is this an example of?
This is an example of a barrier to entry due to high fixed/start-up costs, which can sustain an imperfectly competitive market.