Term
| Perfectly competitive markert |
|
Definition
| A market in which (1) there are many buyers and sellers; (2) each firm produces a homogeneous product; (3) buyers and sellers have perfect information; (4) there are no transaction costs; and (5) there is free entry and exit |
|
|
Term
|
Definition
| The demand curve for an individual firm’s product; in a perfectly competitive market, it is simply the market price. |
|
|
Term
|
Definition
| The change in revenue attributable to the last unit of output; for a competitive firm, MR is the market price. |
|
|
Term
|
Definition
| a market structure in which a single firm serves an entire market for a good that has no close substitutes |
|
|
Term
|
Definition
| exist whenever long-run average costs decline as output increases |
|
|
Term
|
Definition
| exist whenever long-run average cost increase as output increases |
|
|
Term
|
Definition
| exists when the total cost of producing two products within the same firm is lower than when the products are produced by separate firms |
|
|
Term
|
Definition
| Exist when the marginal cost of producing one output is reduced when the output of another product is increased. |
|
|
Term
| Deadweight loss of monopoly |
|
Definition
| The consumer and producer surplus that is lost due to the monopolist charging a price in excess of marginal cost |
|
|
Term
| Monopolistically competitive market |
|
Definition
| A market in which (1) there are many buyers and sellers; (2) each firm produces a differentiated product; and (3) there is free entry and exit |
|
|
Term
|
Definition
| A form of advertising where a firm attempts to increase the demand for its brand by differentiating its product form competing brands |
|
|
Term
|
Definition
| The additional value added to a product because of its brand. |
|
|
Term
|
Definition
| A marketing strategy where goods and services are tailored to meet the needs of a particular segment of the market |
|
|
Term
|
Definition
| A form of niche marketing where firms target products toward consumers who are concerned about environmental issues. |
|
|
Term
|
Definition
| A market structure in which there are only a few firms, each of which is large relative to the total industry. |
|
|
Term
|
Definition
|
|
Term
|
Definition
| A market structure in which (1) there are few firms serving many consumers; (2) firms produce differentiated products; (3) each firm believes rivals will respond to a price reduction but will not follow a price increase' and (4) barriers to entry exist. |
|
|
Term
| An oligopoly with only two firms |
|
Definition
| An industry in which (1) there are few firms serving many consumers; (2) firms produce differentiated products; (3) each firm believes rivals will respond to a price reduction but will not follow a price increase; and (4) barriers to entry exist. |
|
|
Term
|
Definition
| An industry in which (1) there are few firms serving many consumers; (2) firms produce either differentiated or homogeneous products; (3) each firm believes rivals will hold their output constant if it changes its output; and (4) barriers to entry exist |
|
|
Term
| Best-Response (Or Reaction) Function |
|
Definition
| A function that defines the profit-maximizing level of output for a firm for given output levels of another firm. |
|
|
Term
|
Definition
| A situation in which neither firm has an incentive to change its output given the other firm's output. |
|
|
Term
|
Definition
| A function that defines the combinations of outputs produced by all firms that yield a given firm the same level of profits. |
|
|
Term
|
Definition
| An act by a firm whenever a market is dominated by only a few firms when they can benefit at the expense of consumers by “agreeing” to restrict output or by charging higher prices |
|
|
Term
|
Definition
| An industry in which (1) there are few firms serving many consumers; (2) firms produce either differentiated or homogeneous products; (3) a single firm (the leader) chooses an output before rivals select their outputs; (4) all other firms (the followers) take the leader's output as given and select outputs that maximize profits given the leader's output; and (5) barriers to entry exist. |
|
|
Term
|
Definition
| An industry in which (1) there are few firms serving many consumers; (2) firms produce identical products at a constant marginal cost; (3) firms compete in price and react optimally to competitors' prices; (4) consumers have perfect information and there are no transaction costs; and (5) barriers to entry exist |
|
|
Term
|
Definition
| A market in which (1) all firms have access to the same technology; (2) consumers respond quickly to price changes; (3) existing firms cannot respond quickly to entry by lowering their prices; and (4) there are no sunk costs |
|
|
Term
|
Definition
| Costs a new entrant must bear that cannot be recouped upon exiting the market |
|
|
Term
|
Definition
| Pricing strategy in which a firm optimally sets the internal price at which an upstream division sells an input to a downstream division |
|
|
Term
|
Definition
| a strategy in which a firm advertises a price and a promise to match any lower price offered by a competitor |
|
|
Term
|
Definition
The practice of bundling several different products together and selling thema t a single "bundle price"
i.e. 6 pack of soda/beer |
|
|
Term
|
Definition
The practice of charging differenct prices to consumers for the same good or service
i.e. movie ticket prices - diff. groups, diff. prices |
|
|
Term
|
Definition
pricing strategy in which identical products are packaged together in order to enhance profits by forcing customers to make an all-or-none decision to purchase.
i.e. 100 shts of paper |
|
|
Term
|
Definition
| Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals |
|
|
Term
|
Definition
Pricing strategy in which higer prices are charged during peak hours than during off-peak hours
i.e. hotel prices during summer
gas prices during holidays |
|
|
Term
|
Definition
Pricing strategy in which consumers are charged a fixed fee for the right to purchase a product, plus a per-unit charge for each unit purchased.
i.e. membership to Sam's club, Costco |
|
|
Term
|
Definition
| Pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product. |
|
|
Term
|
Definition
| A condition describing a set of strategies in which no player can improve her payoff by unilaterally changing her own strategy, given the other players' strategies. |
|
|
Term
|
Definition
| A strategy that results in the highest payoff to a player regardless of the opponent's action. |
|
|
