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Econ 2106-Micro > Exam 3 > Flashcards

Exam 3 Flashcards

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1
Q

a producer whose actions have no effect on the market price of the good or service it sells

A

price taking producer

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2
Q

a consumer whose actions have no effect on the market price of the good or service he or she buys

A

price taking consumer

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3
Q

a market in which all market participants are price takers

A

perfectly competitive market

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4
Q

an industry in which producers are price takers

A

perfectly competitive industry

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5
Q

the fraction of the total industry output accounted for by that producer’s output

A

market share

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6
Q

when consumers regard the products of different producers as the same good

A

a standardized product or commodity

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7
Q

an industry has this when new producers can easily enter into an industry and existing producers can easily leave that industry

A

free entry and exit

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8
Q

2 necessary conditions for perfect competition

A
  1. an industry must contain many producers, none of whom have a large market share 2. consumers must regard the products of all producers as equivalent
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9
Q

perfectly competitive industries are normally characterized by

A

free entry and exit

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10
Q

the change in total revenue generated by an additional unit of output

A

marginal revenue

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11
Q

profit is maximized by producing the quantity of output at which the marginal revenue of the last unit produced is equal to its marginal cost

A

optimal output rule

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12
Q

the optimal amount of an activity is the level at which marginal benefit is equal to marginal cost

A

profit maximizing principle of marginal analysis

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13
Q

shows how marginal revenue varies as output varies

A

marginal revenue curve

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14
Q

a price-taking firm’s profit is maximized by producing the quantity of output at which the market price is equal to the marginal cost of the last unit produced

A

price taking firm’s optimal output rule

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15
Q

the ________ of a price taking firm is the market price at which it earns zero profit

A

break even price

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16
Q

equal to minimum average variable cost

A

shut down price (firm will cease production in the short run if the market price falls below this)

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17
Q

shows how an individual producer’s profit-maximizing output quantity depends on the market price, taking fixed costs= as given

A

short-run individual supply curve

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18
Q

shows the relationship between the price of a good and the total output of the industry as a whole

A

industry supply curve

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19
Q

shows how the quantity supplied by an industry depends on the market price given a fixed number of producers

A

short-run industry supply curve

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20
Q

occurs when the quantity supplied equals the quantity demanded, taking the number of producers as given

A

short-run market equilibrium

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21
Q

a market is in ______ when the quantity supplied equals the quantity demanded, given that sufficient time has elapsed for entry into and exit form the industry to occur

A

long-run market equilibrium

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22
Q

shows how the quantity supplied responds to the price once producers have had time to enter or exit the industry

A

long-run industry supply curve

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23
Q

four types of market structures

A

monopoly, oligopoly, monopolistic competition, perfect competition

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24
Q

a firm that is the only producer of a good that has no close substitutes

A

monopolist

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25
an industry controlled by a monopolist
monopoly
26
the ability of a firm to raise prices
market power
27
something that prevents other firms from entering the industry
barrier to entry
28
exists when increasing returns to scale provide a large cost advantage to a single firm that produces all fo an industry's output
natural monopoly
29
exists when the value of a good or service to an individual is greater when many other people use the good or service as well
network externality
30
gives an inventor a temporary monopoly in the use or sale of an invention
patent
31
gives the creator of a literary or artistic work sole rights to profit from that work
copyright
32
in _____ of a monopoly, the good is supplied by the government or by a firm owned by the government
public ownership
33
limits the price that a monopolist is allowed to charge
price regulation
34
there is only one buyer of a good
monopsony
35
a firm that is the sole buyer in the market
monopsonist
36
offers its product to all consumers at the same price
single-price monopolist
37
charging different prices to different consumers for the same good
price discrimination
38
takes place when a monopolist charges each consumer his or her willingness to pay (the max that a customer is willing to pay)
perfect price discrimination
39
a firm that is the only producer of a good that has no close substitutes
monopolist
40
an industry controlled by a monopolist
monopoly
41
the ability of a firm to raise prices
market power
42
something that prevents other firms from entering the industry
barrier to entry
43
exists when increasing returns to scale provide a large cost advantage to a single firm that produces all fo an industry's output
natural monopoly
44
exists when the value of a good or service to an individual is greater when many other people use the good or service as well
network externality
45
gives an inventor a temporary monopoly in the use or sale of an invention
patent
46
gives the creator of a literary or artistic work sole rights to profit from that work
copyright
47
in _____ of a monopoly, the good is supplied by the government or by a firm owned by the government
public ownership
48
limits the price that a monopolist is allowed to charge
price regulation
49
there is only one buyer of a good
monopsony
50
a firm that is the sole buyer in the market
monopsonist
51
offers its product to all consumers at the same price
single-price monopolist
52
charging different prices to different consumers for the same good
price discrimination
53
takes place when a monopolist charges each consumer his or her willingness to pay (the max that a customer is willing to pay)
perfect price discrimination
54
involves playing cooperatively at first, then doing whatever the other player did the previous period
tit for tat strategy
55
a producer in an industry with only a small number of producers
oligopolist
56
when no one firm has a monopoly but producers nonetheless realized that they can affect market prices is an industry characterized by
imperfect competition
57
an oligopoly consisting of only two firms
duopoly (duopolist)
58
when sellers cooperate to raise their joint profits
collusion
59
an agreement among several producers to obey output restrictions in order to increase their joint profits
cartel
60
firms that have a tacit understanding not to compete on price often engage in intense ______ using advertising and other means to try to increase their sales
nonprice competition
61
when a firm's decision significantly affects the profits of other firms in the industry
interdependence
62
the study of behavior in situations of interdependence
game theory
63
the reward received by a player in a game, such as the profit earned by an oligopolist
payoff
64
shows how the payoff to each of the participants in a two player game depends on the actions of both
payoff matrix
65
a name owned by a particular firm that distinguishes its products from those of other firms
brand name
66
price in a perfectly competitive industry is
always equal to the marginal revenue of the firm
67
when each player in a game chooses the action that maximizes his or her payoff given the action of other players ignoring the effects of his or her action on the payoffs received by those other players
nash equilibrium or noncooperative equilibrium
68
when a firm attempts to influence the future behavior of other firms
strategic behavior
69
involves playing cooperatively at first, then doing whatever the other playe rdid the previous period
tit for tat strategy
70
when firms limit production and raise prices in a way that raises one anothers' profits even though they have not made any formal agreement
tacit collusion
71
consists of efforts undertaken by the government to prevent oligopolistic industries from becoming or behaving like monopolies
antitrust policy
72
occurs when tacit collusion breaks down and prices collapse
price war
73
an attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
product differentiation
74
one firm sets its price first and other firms then follow
price leadership
75
firms that have a tacit understanding not to compete on price often engage in intense ______ using advertising and other means to try to increase their sales
nonprice competition
76
a market structure in which there are many competing producers in an industry, each producer sells a differentiated product, and there is free entry into and exit from the industry in the long run
monopolistic competition
77
three forms of product differentiation
by style or type, by location, by quality
78
in the long run, a monopolistically competitive industry ends up in ________, each firm makes zero profit at its profit-maximizing quantity
zero-profit equilibrium
79
firms in a monopolistically competitive industry have _______; they produce less than the output at which average total cost is minimized
excess capacity
80
a name owned by a particular firm that distinguishes its products from those of other firms
brand name
81
price in a perfectly competitive industry is
always equal to the marginal revenue of the firm
82
if a perfectly competitive firm is producing at a quantity where MC>MR then profit
can be increased by decreasing production

Econ 2106-Micro (1 decks)

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