Term
| How does the entry of new coffeehouses affect the profits of existing coffee houses? |
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Definition
-entry will decrease the profits of existing coffee houses
-each individual demand curve will shift left
-the demand curve will become more elastic |
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Term
| suppose you invest $200,000 in a business. The return you could earn each year on a similar investment using that money is 10 percent, or $20,000. In an economic sense, the $20,000 is... |
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Definition
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Term
| Which type of efficiency is achieved by a monopolistically competitive firm in the long run? |
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Definition
| neither allocative nor productive efficiency |
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Term
| What trade-offs do customers face when buying a product from a monopolistically competitive firm? |
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Definition
| consumers pay a price greater than marginal cost but also have choices more suited to their tastes. |
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Term
| what is the term given to all the activities necessary for a firm to sell a product to a consumer? |
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Definition
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Term
| What is the term given to the actions of a a firm intended to maintain the differentiation of a product over time? |
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Definition
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Term
Which of the following statements is correct?
a. brand names can be can be easily protected, especially if time goes by
b.legally enforcing trademarks can be difficult
c.establishing franchises is the best strategy to protect a firm's brand name
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Definition
| b. legally enforcing trademarks can be difficult |
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Term
T/F:
The marginal revenue curve lies below the demand curve for any firm that has the ability to affect the price of the product it sells |
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Definition
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Term
T/F
Monopolistically competitive firms charge a price greater than marginal cost in both the short run and the long run. |
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Definition
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Term
| What is a market structure in which a small number of independent firms compete? |
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Definition
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Term
| what is anything that keeps new firms from entering an industry in which firms are earning economic profits? |
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Definition
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Term
| According to the textbook, which of the following industries in the retail trade had the highest concentration ratios in the U.S.? |
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Definition
| warehouse clubs (B.J.'s) and supercenters; discount department stores |
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Term
| according to the textbook, which of the following industries in manufacturing had the highest concentration ratios in the U.S.? |
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Definition
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Term
| Economies of scale help determine the extent of.. |
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Definition
| competition of an industry |
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Term
| economies of scale exist when a firm's ______ average cost falls as it _______ output. |
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Definition
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Term
| Which of the following is a barrier to entry |
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Definition
| economies of scale, ownership of a key input, and patents |
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Term
| Game theory studies the decisions of firms in industries where the profits of each firm depend on: |
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Definition
| the firm's interactions with other firms |
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Term
| every game has these characteristics |
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Definition
| rules, strategies and payoffs |
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Term
| What is the definition of business strategy |
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Definition
| refers to actions taken by firms to attain their objectives |
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Term
| a situation where each firm chooses the best strategy, given the strategies chosen by other firms |
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Definition
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Term
| An agreement among firms to change the same price or to otherwise not compete is |
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Definition
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Term
| A strategy that is the best for a firm, no matter what strategies other firms use is |
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Definition
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Term
| An equilibrium in a game in which players cooperate to increase their mutual payoff is called |
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Definition
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Term
| A game where pursuing dominant strategies results in noncooperation that leaves everyone worse off is called |
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Definition
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Term
| In a repeated game, the losses associated with not cooperating are _____ the losses of cooperating. |
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Definition
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Term
| How does the prisoner's dilemma compare to the outcome of a repeated game? |
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Definition
| in a repeated game, two firms are more likely to charge the high price and receive high profits. |
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Term
| A group of firms that colludes by agreeing to restrict output to increase prices and profits is called |
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Definition
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Term
Fill in the blanks about the history of OPEC:
Sustaining high prices has been _____ because members often _____ their output quotas. |
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Definition
| difficult, produce more than |
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Term
Fill in the blanks about the history of OPEC:
if individual countries that are members of OPEC exceed their production quotas, the amount of oil supplied to the world _____ and the price of oil____ |
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Definition
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Term
| When is a firm considered a monopoly? |
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Definition
| when a firm can ignore the actions of all other firms |
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Term
| What is the name given to a situation where economies of scale are so large that one firm can supply the entire market at a lower average cost than two or more firms? |
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Definition
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Term
| A natural monopoly is most likely to occur in what type of market? |
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Definition
| a market where fixed costs are very large relative to variable costs |
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Term
| if increased competition leads to higher costs and higher prices in an industry, how should that market be characterized? |
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Definition
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Term
| which of the following types of firms use the marginal revenue = marginal cost approach to maximize profits? |
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Definition
| perfectly competitive forms, monopolistically competitive forms, monopolies. |
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Term
| in what market structure is the firm's demand curve the same as the market demand for the product? |
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Definition
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Term
| which firm faces a downward-sloping demand curve and a downward-sloping marginal revenue curve? |
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Definition
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Term
| When a firm's demand curve slopes downward and the firm decides to cut price, which of the following happens? |
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Definition
| it sells more units but receives lower revenue per unit. |
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Term
| what are the effects of a monopoly? |
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Definition
-causes a reduction in consumer surplus
-causes an increase in producer surplus
-causes a reduction in economic efficiency |
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Term
| what is the definition of a market power? |
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Definition
| market power is the ability of a firm to charge a price greater than marginal cost |
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Term
| what does collusion refer to? |
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Definition
| collusion refers to an agreement among firms to charge the same price or otherwise not to compete. |
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Term
| what is a merger between firms in the same industry? |
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Definition
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Term
| what is most likely to increase market power? |
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Definition
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Term
| What is the value of the HHI when there are four forms in an industry with each firm having an equal market share? |
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Definition
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Term
| which of the following is the main purpose of pricing strategies? |
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Definition
| to increase economic profit |
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Term
| what is the name given to the practice of buying a product in one market at a low price and almost simultaneously reselling it in another market at a high price? |
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Definition
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Term
| when will firms be able to price discriminate? |
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Definition
| when the law of one price does not hold and it is impossible to resell a product |
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Term
| when is the charging different prices to different buyers NOT considered price discrimination? |
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Definition
| if the difference in price is due to differences in cost |
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Term
| what are the requirements for successful price discrimination? |
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Definition
-firm must possess market power
- some consumers must have a greater willingness to pay for the product than other consumers
-the firm must be able to divide up, or segment the market |
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Term
| what is a result of perfect price discrimination? |
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Definition
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Term
| what are they key results of price discrimination? |
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Definition
| profits increase and consumer surplus decreases |
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Term
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Definition
| changing different prices to different customers for the same product when the price differences are not due to differences in cost. |
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Term
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Definition
| a situation in which consumers pay one price (or tariff) for the right to buy as much of a related good as they want at a second price. |
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