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Karlan Morduch Microeconomics Ch. 13-16 (OSU Econ 2001.01 Exam #3)
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Karlan Morduch Microeconomics Ch. 13-16 (OSU Econ 2001.01 Exam #3)
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KARLAN MORDUCH MICROECONOMICSCH. 13-16 OSU ECON 2001.01 EXAM #3
k competitive market - a market in which fully informed price-taking buyers and sellers easily trade a
standardized good or service
price taker - a buyer/seller who can't effect the market price
market power - the ability to noticeably affect market prices
average revenue - total revenue divided by the quantity sold
marginal revenue - the revenue generated by selling an additional unit of good
shut down rule - if price < average variable cost
exit rule - if price < average total cost
free entry - new firms can be created and begin producing goods and services
monopoly - a firm that is the only producer of a good/service with no close substitutes
barriers to entry (what creates monopoly): - scarce resources, economies of scale, government
intervention, aggressive tactics
natural monopoly - market where a firm can produce (@ a lower cost than multiple firms) the entire of
quantity of output demanded aka public transport
quantity effect - total revenue increases due to the money brought in by the sale of an additional unit
price effect - total revenue decreases bc all units sold now bring in a lower price than they did before
profit = - (price-ATC) x quantity
Sherman Act - passed in 1890 that requires the federal government to investigate and prosecute
corporations that engage in anti-competitive practices
vertical split - way for governments to combat monopoly by splitting production from supply
price discrimination - the practice of charging customers different prices for the same good
where must a monopoly charge? - along the market demand curve
oligopoly - a market with only a few firms which sell a similar good/service
monopolistic competition - a market with many firms that sell goods that are similar but slightly different
product differentiation - the creation of products that are similar to competitors but more attractive in
some ways
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