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Economics
Microecon as told by the future President of the United States.
39
Economics
Undergraduate 4
12/19/2011

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Term
Market structure characterized by a
large number of buyers and sellers
Having an identical homgeneous product
No barriers to entry
Definition
Perfect competition
Term
Demand curve for perfect competition is
Definition
Horizontal
Term
Firms only willing and able to supply output for levels if they can at least cover their ___ in the short run and ___ ATC in the long run.
Definition
AVC in short run
ATC in the long run
Term
The horizontal summation of all the individual firm's supply curves
Definition
Industry supply curve
Term
In the long run, every competitive firm will earn __ that is ___ economic profit.
Definition
Normal profit
Zero
Term
In each competitive firm in long run equilibrium P=___=MinumumATC=_____
Definition
MC
Minimum LRATC
Term
Monopolistically competitive industries characterized by:
Definition
Many producers
Heterogenous prodcut
No barriers to entry
Term
Monopolists have some impact on ____. This comes from selling a _____ product.
Definition
Price
Differentiated
Term
Long run equilibrium must satisfy the following three conditions
Definition
Each firm is selling at a price and output combo on its demand curve
Each firm is miximizing its profits, given the demand curve its facing
Entry has forced economic profits of each firm down to zero
Term
Someone could be made better off without making anyone else worse off
Output is below what it was in the perfectly competitive case
Definition
Pereto inificient
Term
Firms will typically be operating to the ____ of the level of output where their average cost is minimized.
Definition
Left
Term
Few producers
Heterogenous or homogenous
Barriers to entry
Definition
Oligopoly
Term
Key to oligopolies
Definition
Strategic Interdependence
Term
Barriers to entry include
Definition
Economies of scale
Reputation
Term
Strategic barriers to entry
Definition
Excess production
Prime shelf space
Advertising
Term
Legal barriers to entry
Definition
Patents and copyrights
Term
Firms who interact with respect to price and quantity and agree amongst selves to fix output quanity to level less than perfect comp and greater than or equal to monopoly levels
What is action called?
Definition
Cartels
Collision
Term
A competitive situation in which two or more players persue their own interests and no one can dictate outcomes.
Definition
Game
Term
A complete contingent of action for a player in a game
Definition
Strategy
Term
A strategy that is best for a player no matter what the other player chooses
Definition
Dominant strategy
Term
A situation in which neither player has incentive to change his/her behavior
Definition
Equilibrium
Term
A set of choices such that each player's choices are optimal regardless of what other player chose.
Definition
Dominant strategy equilibrium
Term
A situation in which no one can be made better off, without making someone worse off
Definition
Pereto Optimum
Term
A situation in which every player of a game takes the best action for herself, given the actions taken by all other players.
Definition
Nash equilibrium
Term
A market sturctue characterized by a single seller of a highly differentiated product.
Definition
Monopoly
Term
Basic characteristics of monopolies
Definition
Only one firm can survive
Large barriers to entry
Highly differentiated
Term
Two things driving natural monopolies
Definition
Lumpy inputs
Very limited demand
Term
One firm can produce at a lower cost/ unit than two or three firms
Definition
Natural monopoly
Term
Copyrights cover literary, artistic, and music for ___ years
Definition
50
Term
Patents cover scientific invention for ____ years
Definition
20 years
Term
The cost of leaving a network and learning a new system
Definition
Switching costs
Term
Monopoly barriers to entry
Definition
Economies of scale
Government blocks
Network externalities
Term
Monopolists can't charge whatever they want because of
Definition
Technology
Input costs
Term
Monopolists earn a profit whenever P>___
Definition
ATC
Term
Selling different units of output at different prices
Definition
Price Discrimination
Term
Charging each customer the most that he would be willing and abel to pay for each item he buys
Definition
First degree price discrimination
Term
Charging the same customer prices based on use rates or quantities purchased
Definition
Second degree price discrimination
Term
Charging different prices to different classes or markets
Definition
Third degree price discrimination
Term
Charging different prices to different classes or markets
Definition
Third degree price discrimination
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