31 Cards in this Set
Front | Back |
---|---|
Conditions of Pure Monopoly
|
Single Seller
No Close Substitutes
Price Maker
Blocked Entry
|
Market Barriers to Entry
|
Economics of Scale- Certain number to enter
Legal Barriers- copyright, licenses, pattens
Essential Resources- control a certain resource you can control price
Strategic Barriers- convincing your product is important
|
Productive Effieciency
|
The production of a good in the least costly way; occurs when production takes place at the output at which 'average total cost' is a minimum and 'marginal product' per dollar's worth of input is the same for all inputs
|
Allocative Efficiency
|
produce where p=mc
|
Dynamic Adjustments
|
Have ability to restore efficiency when disrupted by changes in economy.
|
Consumer Surplus
|
The difference between the price a consumer is willing to pay and the price actually paid
|
Price Discrimination
|
Charging a different price to a different customer
|
3 conditions needed for Price Discrimination
|
1. Market power (ability to set price)
2. Distinguishable Customers
3. Prevention of Resale
EX: movie tickets, airline pricing, coupons, qty. discounts, financial aid for college
|
Natural Monopoly
|
Large economy of scale
|
Pure Competition
|
Many buyers and many sellers
Standardized Product
Price Takers
Free entry and exit
|
Monopolistic Competition
|
Large number of firms
Differentiation Product
Some control over price
Easy entry and exit
|
Oligopoly
|
Small number of sellers, each with large share of the market.
Ex-Car companies
|
Total Revenue for Competitive
|
price X Quantity
|
Profit Maximization
|
MC=MR
|
Shut Down Rule
|
P<AVC
|
Cartels
|
Group of producers that coordinates its pricing and production decisions.
|
Obstacles to Collusion
|
Number of Firms
Cheating
Recession
Illegal
Price leader ship model
|
Importance of Resource Pricing
|
Determines income
Determines where resource is used
Cosy minimization needed to profit maximize
ethical concerns
|
Derived Demand
|
what labor will bring
Amount of goods
what price
|
Marginal Revenue Product
|
amount you get for goods
MRP=M X P
|
amount you get for goods
MRP=M X P
|
Increase demand for product to increase union wage rates
increase demand for goods they produce (lobbying)
alter price of other inputs (higher min. wage for non union workers)
|
Exclusive craft Union model
|
Reduce number of members
raise prices
|
Inclusive or Industrial Union Model
|
Unions that try and organize all available workers
accept all workers, skilled, unskilled, semi skilled workers
may impose wage rate, which can be above the competitive wage rate. This will lower the supply of jobs
automobile and steel workers
right to strike- steel industries
|
Compensation Differences
|
Compensating for job hazards
|
Market Imperfections
|
Lack of Information
Geographical Mobility
Unions and Gov. Interference
Discrimination
|
Non-Competing Groups
|
Different markets don't compete
|
International Economy
|
Goods and Services flows
Resource flows
Information and technology flows
Financial Flows
|
U.S and World Trade
|
Volume and Pattern
Dependency
Patterns
Who we trade with
Financial Linkages
|
Factors of Rapid Trade Growth
|
- transportation technology
- communication technology
- decline in tariffs
|
Absolute advantage
|
ability to produce more of a good vs competitors when using the same amount of resources
|
Comparative cost
|
...
|