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Chapter 13 Parkin & Bade
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18
Economics
Undergraduate 1
12/08/2015

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Term
monopoly
Definition
A _______ is a market with a single firm that produces a good or service with no close substitutes and that is protected by a barrier that prevents other firms from entering that market.
Term
barrier to entry
Definition
A constraint that protects a firm from potential competitors is called a _________.
Term
natural monopoly
Definition
A natural barrier to entry creates a ________ : a market in which economies of scale enable one firm to supply the entire market at the lowest possible cost.
Term
legal monopoly
Definition
A legal barrier to entry creates a _________: a market in which competition and entry are restricted by the granting of a public franchise, government licence, patent, or copyright.
Term
ownership barrier to entry
Definition
An ___________ occurs if one firm owns a significant portion of a key resource.
Term
single-price monopoly
Definition
A ___________ is a firm that must sell each unit of its output for the same price to all its customers.
Term
price discrimination
Definition
When a firm practises ________, it sells different units of a good or service for different prices.
Term
economic rent
Definition
Any surplus—consumer surplus, producer surplus, or economic profit—is called _________.
Term
rent seeking
Definition
The pursuit of wealth by capturing economic rent is called ____________.
Term
perfect price discrimination
Definition
The more consumer surplus a firm is able to capture, the closer it gets to the extreme case called _____________ , which occurs if a firm can sell each unit of output for the highest price someone is willing to pay for it.
Term
regulation
Definition
__________ —rules administered by a government agency to influence prices, quantities, entry, and other aspects of economic activity in a firm or industry—is a possible solution to this dilemma.
Term
deregulation
Definition
__________ is the process of removing regulation of prices, quantities, entry, and other aspects of economic activity in a firm or industry.
Term
social interest theory
Definition
The __________ is that the political and regulatory process relentlessly seeks out inefficiency and introduces regulation that eliminates deadweight loss and allocates resources efficiently.
Term
capture theory
Definition
The _________ is that regulation serves the self-interest of the producer, who captures the regulator and maximizes economic profit.
Term
marginal cost pricing rule
Definition
The answer is by being regulated to set its price equal to marginal cost, known as the ____________.
Term
average cost pricing rule
Definition
The __________ sets price equal to average total cost.
Term
rate of return regulation
Definition
Under _________, a firm must justify its price by showing that its return on capital doesn’t exceed a specified target rate.
Term
price cap regulation
Definition
A _______ is a price ceiling—a rule that specifies the highest price the firm is permitted to set.
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