Econ 1020 1st Edition Exam # 3 Study Guide May 9 What is a monopoly competition? What is an oligopoly? What are aspects of an oligopoly?- Monopoly competitiono Described as niche markets (smallmarkets)o Trying to appeal to a narrow taste as longas it is profitable and consumers willpurchase the product- Oligopolyo A few firmso Interdependency- optimal profit strategy is dependent on what is chosen by other firms (competitors) Ex: prisoner dilemma- Aspects of oligopolyo Price leadership- a company will be looked at to get the price of a certain product ex: Ford & Chrysler looked to GM (General Motors) for the set prices of different caro Game theory- trying to find a equilibrium by choosing between different prices- Competitive firm- 1 variable input- Short-run- MC=MR- Guaranteed price= MRPo (marginal revenue product)May 13What are externalities? What are public goods?- Externalities- when one person or business’s actions impose effects on others without taking those into accounto The price information being conveyed to ourselves are not correcto There can be negative and positive externalitieso A negative use of externalities is an overuse of resources- Why do we have externalities?o Resources are scarce and are incorrectly priced, causing incorrect desire for those resourceso Some resources aren’t allowed by anyone (air & ocean)o Some resources that are owned are too costly to let people to not use those resources- Public goods are a special case of externalitiesPublic Good Candy Bar Concert Flood Control1. Non-Rivalry No Yes Yes2. Non-exclusion No No YesPublic school is NOT a public good.Non-Rivalry  ∑MBp=∑MCpIn general, you will not find private production of public