Term
| 5 Conditions for Perfect Competition |
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Definition
| Large number of small terms; large number of small consumers; perfect information; free entry and exit; identical products |
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Definition
| Setting a price lower than P* so a company will sell a lot, but not get a lot of profit. |
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| Perfectly Competitive Market Long Run Shut Down |
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Definition
| Companies should stay in the market if Price is at or above the Average Total Cost. Shut down if P is less than minATC |
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Term
| Perfectly Competitive Market Short Run Shut Down |
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Definition
| The firm should shut down when P is less than the Average Variable Cost (AVC) |
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Term
| Efficiency of Perfect Competition |
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Definition
| perfectly competitive markets will tends towards the equilibrium position--or perfect efficiency |
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Definition
| Nothing makes it more expensive or cheaper in this market |
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Term
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Definition
| Moving up the demand curve is more expensive??? |
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Term
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Definition
| Moving up the demand curve is less expensive??? |
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Term
| 3 Conditions for Monopoly |
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Definition
| Only one firm in the market; Barriers to entry; No close substitute good |
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Term
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Definition
| the restriction-- firms can't legally enter the market |
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Term
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Definition
| any situation where it is cheaper to have one firm producing than multiple firms competing |
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Definition
| Selling a good at below cost to push other forms out of the market |
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Definition
| the firm charges the same price to everyone for a given quantity |
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Term
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Definition
| charging different prices to different customers |
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Term
| 1st Degree Price Discrimination |
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Definition
| Perfect Price Discrimination--charging each consumer his or her max willingness to pay |
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Term
| 2nd Degree Price Discrimination |
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Definition
| Optional Two-Part Tarriff--consumers choose their price: (1) High Price w/o a fee (2)Low Price w/ a fee |
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Term
| 3rd Degree Price Discrimination |
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Definition
| Group Price--the consumer does not get to choose what price to pay, there is one characteristic the firm observes to pick the price |
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Term
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Term
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Definition
| Benefits Society, maybe firm, definitely not consumers...If P is below Pm, consumers can purchase more and get surplus |
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Term
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Definition
| Every increment you increase by, you lose some consumers, cannot benefit society or consumers, may benifit firms |
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Term
| Rate of Return Regulation |
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Definition
| Firms costs are included and price is set to give that firms zero economic profit--Problem: no bright line for what costs are legit |
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Term
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Definition
| A price ceiling in the market: (1) removes the firms market power and (2)If price is set at the right level, the market is perfectly efficent |
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Term
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Definition
| MC<ATC; Natural Monopoly that has not yet exhausted economies of scale |
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Term
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Definition
| MC>ATC; Consmers can consume the gdds at a good price, DWL=0 |
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Term
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Definition
| Any situation where the payoff to one player in a game is dependent on their actions and the actions of others |
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Term
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Definition
| the demand that remains potentially unsatisfied |
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Term
| Schumpeterian Competition |
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Definition
| A market where a firm has something other firms cannot mimic |
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Term
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Definition
| Firms locate near each other b/c they can get employees cheaper |
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Term
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Definition
| small number of firms; barriers to entry; Identical or differentiated Products |
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Term
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Definition
| Cartel; Collude-agree to max profit |
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Term
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Definition
When firms compete w/each other by determining price and keeping it constant in the short run
(P constant, Q Fluxuates) |
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Term
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Definition
| Firms set a production level and keep it constant in the short run |
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