ECON Flashcards
(25 cards)
Large buyers/sellers
homogeneous (identical)
easy to enter/leave
Perfect Competition
1 seller unique product (no sub) restricted entry
Perfect Monopoly
Large # sellers
differentiated (close subs)
easy to enter/leave
Monopolistic Competition
Few Sellers
similar or differentiated
Restricted Entry
Oligopoly
price taker
straight horizontal demand curve
SR: MR=MC
LR: No profits
Perfect Competition
Negative Demand Curve
SR: MR=MC
LR: profit if chg size of ops/advertising
Perfect Monopoly
SR: MR=MC
Negative demand curve
highly elastic (close subs)
Profit if ATC
Monopolistic Competition
price war kinked curve overt collusion tacit collusion LR Profits: AT>ATC
Oligopoly
Perfectly Elastic Demand Curve
Perfect Competition
Pricing decisions are interdependent
Oligopoly
Employ public relations or lobbying
Perfect Monopoly
avoid price competition
Oligopoly
Least likely to invest in brand development
Perfect Competition
Most likely to use price discrimination to gain SR profits
Perfect Monolopy
Least likely to do extensive advertising
Perfect Competition (same product)
Most likely to do brand research, development and advertising
Monopolistic Comp
Company can produce goods more efficiently with fewer resources
Absolute Advantage
Entity has ability to produce goods at a lower opportunity cost than another company
Comparative Advantage
Sale of product to foreign market lower than domestic market
Dumping
Right to sell specific security at a fixed conditions of price and time
PUT
Right to buy in the future, call option, ex. American importer will pay British supplier in 3 mos
CALL
Porter’s five forces
New Competition, bargaining power of customers, bargaining power of suppliers, threat of substitution, rivalry
Porter’s three generic strategies
Focus, cost leadership, product differentiation
Collecting data about all segments of the business
Scanning
