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Econ Micro > Unit 8 > Flashcards

Unit 8 Flashcards

1
Q

What can firms with market power do and what type of competition is it

A

Set own price = monopolistic competition

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2
Q

What are outcomes of firms who set own price

A

No Pareto efficient

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3
Q

What are prince taking firms competition

A

Take price given to them and competitive equilibrium

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4
Q

If multiple firms sell identical goods how much power do they have

A

No market power and are price takers

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5
Q

Demand curve

A

Quantity that is willing to be consumed at given price level

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6
Q

Supply curve

A

Total quantity that firms are willing to offer at given proce level

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7
Q

What equilibrium is it where supply = demand

A

Nash equilibrium

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8
Q

HOW MUCH INFLUENEC DO PRICAE TAKING FIRMS HAVE

A

None on the market price

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9
Q

What is demand curve of firm that is price takin

A

Horizontal line that is equal to market price

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10
Q

Price taking firm max profit

A

Price = supply (MC)

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11
Q

At competitive equilibrium

A

Firms are price takers and supply = demand

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12
Q

What does distribution of surplus depend on

A

Elasticities of supply and demand

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13
Q

What is it when p>p*

A

Excess supply

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14
Q

what is it when p<p*

A

Excess demand

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15
Q

What happens when excess supply

A

Firms reduce price and increase quantity till p* and q* reached

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16
Q

When happens when excess demand

A

Price is increased and quantity adjusted until p* and q* reached

17
Q

Chaanges to supply and demand curves

A

Tech change
Input price change
Popularity of product

18
Q

When will firms enter market

A

When firms already in the market are earning economic rent and cost of entry is not too high

19
Q

What does increased firm in market =

A

Increased supply at given price

20
Q

What will increased firms do to market price q

A

Decrease and reduce economic rent q

21
Q

How does elastic demand affect DWL

A

Larger

22
Q

Perfect competition

A

Identical goods
Large n.o buyers and sellers
Independent buyers and sellers
Market price easily accesible

Econ Micro (8 decks)

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