Term
| Characteristics of a Monopoly |
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Definition
single seller
no close subsititues/unique
change price through supplied quantity
blocked entry into market |
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Term
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Definition
factors that prevent firms from entering market/indsutry
ATC decreases as quantity increases (small firms fant survive because prices are too high) |
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Term
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Definition
1. Economies of Scale
2. Legal Barriers (Licenses, Patents)
3. Control of Resources
4. Strategic Pricing |
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Term
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Definition
| competitors cant get price low enough |
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Term
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Definition
| patents-exclusive right to use invention and licenses-limited entry by govt licensing |
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Term
| orship/control of essential resources |
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Definition
| like contracts with athletes |
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Term
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Definition
| a new firm tries to enter, monopolist can slash prices (microsoft charged higher prices to computer companies |
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Term
| monopolist is only firms so it faces... |
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Definition
| the entire market demand (standard downward-sloping curve) |
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Term
| marginal revenue is or=demand |
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Definition
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Term
| price is always elastic or inelastic |
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Definition
| elastic (area between vertical axis and marginal revenues intersection with horizantal access) |
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Term
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Definition
| decides at what quantity to produce (demand curve is used to determine the corresponding price |
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Term
| monopolist produces at... |
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Definition
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Term
| know profit and loss graphs on 201 and 203 |
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Definition
also know loss is less common than profit for monopoly but not impossible
loss WIL NOT BE TOLERATED |
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Term
| calculate profit from graph |
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Definition
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Term
| Do monopolists not have demand or not have supply lines |
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Definition
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Term
| does monopoly perfer total profit or unit profit |
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Definition
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Term
| two types of efficiency and wher do they occurr? |
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Definition
productive-p=min. ATC
allocative eff P=mc
neither occur in any system |
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Term
monopoly regulation
graph on 210
where is...
a. socially optimatl
B. fair return price |
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Definition
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Term
| dilemma of (monopoly regulation) |
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Definition
socially optimal price is best for society but causes loss for monopolists
Fair return price gives "normal profit" for monopolies but doesnt completely fix the efficiency |
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Term
| characteristics of monopolistic competition |
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Definition
| (1) a relatively large number of sellers, (2) differentiated products (often promoted by heavy advertising), and (3) easy entry to, and exit from, the industry. |
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Term
| deamnd curve of monopolistic competition is... |
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Definition
| downward sloping and elastic |
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Term
| MC profit and loss graphs pg 220 |
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Definition
Firm produces at mr=mc
know when profit and loss occur
be able to calculate profit giben price, atc, and quantity produced |
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Term
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Definition
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Term
| mono comp elastic exists when... |
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Definition
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Term
| characteristics of oligopoly |
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Definition
has limited control over product price because of mutual interdependence (except when there is collusion among firms), and in which there is typically nonprice competition., a market dominated by a few large producers of a homogeneous or differentiated product. Because of their “fewness,” oligopolists have considerable control over their prices, but each must consider the possible reaction of rivals to its own pricing, output, and advertising decisions.
A Few Large Producers
Homogeneous or Differentiated Products
Control over Price, but Mutual Interdependence
Entry Barriers
Mergers |
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Term
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Definition
study of how people behave in strategic situations
(prisoner's dilemma |
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Term
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Definition
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Term
| 3 concepts illustrtrated in matrix |
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Definition
mutual interdpendence
collusion
incentive to cheat |
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Term
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Definition
nonconclussive
collusive
price leadership model |
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Term
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Definition
firms operate independently
THE CHOICES
match a price change
ignore a proice change
PRICE INFLEXIBILITY
if 1 firm increases price, others ignor
if 1 lowers, others stay same
price is consistent |
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Term
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Definition
assume other firms match price increase or decrease, each firms finds it most profitable to stay at same price as rivals
REDUCES PRICE WARS AND GIVES HIGHER PROFIT
illegal in america bceause of anti-trust |
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Term
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Definition
| group of producers who create a formal written agreement specifiying how much each will produce and charge |
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Term
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Definition
dominant firm initiates a price change and others follow (this is rare)
Dominant firms communicate with others
-lowers price to keep out other frims |
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Term
| why is oligarchy worse than monopoly |
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Definition
| there is monopoly power in oligopoly but no regulation |
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Term
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Definition
increased foreign competition, limit pricing provides lower prices for consumers
technilogical advvance due to the high profits of olipologies |
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Term
| who was worried about population beating resources |
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Definition
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Term
| demographers see population peak when |
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Definition
| 2050, followed by decrease |
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Term
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Definition
| thought people would starve to death in 1980 and 80s |
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Term
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Definition
supplies of commodities have increased
per capita consumption of resources have leveled off and decreased |
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Term
| increased GDP per BTU means... |
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Definition
| more efficient energy use |
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Term
| costs of different types of electricity |
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Definition
fixed cost (cost to build)\
variable cost (generation cost) |
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Term
| as price of traditional energy sources rise |
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Definition
| alternative energies become more realistic |
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Term
| user cost is opportunity cost o extracting and selling resource today instead of in future |
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Definition
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