EXAM REVIEW QUESTIONS Flashcards
(21 cards)
what are indicators from a table that a firm is competative or not?
In a competaive firm, the price is constant. If its not in perfect competition you can see the price decrease as the quanitity increases. Also, MR is falling and not equal to price.
why, in the perfectly competative market, is the long run supply curve more elastic than the short run supply curve?
In the long run, firms enter and exit the market more freely. In general the market supply curve is horizontal. All firm produce at their minimum of ATC, and the market price is fixed
what is a monopsony?
a monopsony is a market in which their is a single buyer. In the labour marketl, a monopsony is an employer that can exert a large influence on the going wage, and therefore has great market power.
what are the characteristics of a competative market?
many buyers and sellers, sellers are price takers, low barriers of entry, similar products
what are the characteristics of a monopoly?
sellers are price makers, high barriers on entry, no close substitues, single seller
what is diminishing marginal product of labour?
this means that the last worker hired contributes less to the total output of the firm, than the worker that was just hired previously
what are the characteristics of a competative monoploy?
many sellers, similar products with differention of the products, free entry and exit
what are the characteristics of an oliogopoly?
few large firms, high barriers to entry, possibility of collusion, interdependence between firms
what is price discrimination?
a rational strategy that can lead to higher monopoly profits and requires an ability to separate consumers on a willingness to pay
what is the Nash Equilibrium?
a situation where each economic actor chooses their best strategy, given the strategies chosen by the other players
what is an externality?
an externality represents the impact of actions (that are not compensated) on the well being of a bystander. Market equilibrium is not effecient when there is externalities.
If marginal cost is rising then that means what?
marginal product is falling. their is an inverse relationship between MC and marginal product
the efficient scale of the firm is the quantity of output that
minimizes ATC
When some resources used in production are available only in limited quantities, what is the likely shape of the long run supply curve in a competative market?
upward sloping
what do we know about a monopolies marginal cost?
it will be less than the price per unit of its product
in what market structures does a profit maximizing firm experience zero economic profit?
perfect competition and monopolisitc competitiom
on what grounds is the practice of tying illegal?
it allows firms to expand their market power
why are labour markets different than other markets?
labour demand is derived
the value of the marginal product of labour is equal to
the change in TR caused by the addition of the last worker
what does a firms labour demand curve represent?
the number or workers that the firm is willing to hire at any given wage
what are the three determinants of demand for the labour curve?
productivity, technological change, price
