{ "@context": "https://schema.org", "@type": "Organization", "name": "Brainscape", "url": "https://www.brainscape.com/", "logo": "https://www.brainscape.com/pks/images/cms/public-views/shared/Brainscape-logo-c4e172b280b4616f7fda.svg", "sameAs": [ "https://www.facebook.com/Brainscape", "https://x.com/brainscape", "https://www.linkedin.com/company/brainscape", "https://www.instagram.com/brainscape/", "https://www.tiktok.com/@brainscapeu", "https://www.pinterest.com/brainscape/", "https://www.youtube.com/@BrainscapeNY" ], "contactPoint": { "@type": "ContactPoint", "telephone": "(929) 334-4005", "contactType": "customer service", "availableLanguage": ["English"] }, "founder": { "@type": "Person", "name": "Andrew Cohen" }, "description": "Brainscape’s spaced repetition system is proven to DOUBLE learning results! Find, make, and study flashcards online or in our mobile app. Serious learners only.", "address": { "@type": "PostalAddress", "streetAddress": "159 W 25th St, Ste 517", "addressLocality": "New York", "addressRegion": "NY", "postalCode": "10001", "addressCountry": "USA" } }

Monopoly, Oligopoly and Monopolistic Competition Flashcards

(43 cards)

1
Q

Explain what a producer surplus is

A

-Difference between Pe and price that entr. want to receive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Explain what a total surplus is

A

-takes into acc., purchase at equi. price
-both parties sell and buy prod.
-at higher/ lower price than willing
-supp. price> min. price will. 2 produce
-consum price<max. price 2 buy

-Total surplus= cons. + produ. surplus

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

TRUE or FALSE: there is a metric to determine total welfare

A

-TRUE, total surplus
-Total surplus= cons. surplus + produ. surplus

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

TRUE or FALSE: Ceteris Paribus means that the market is still and predictable

A

FALSE: means that if noth. changes in the circ. equi. remains

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Explain what a consumer surplus is

A

Difference between Pe and price that consumers are will. to pay

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

List the two main umbrella terms for why equilbirum changes

A

-Changing demand
-Changing Supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

List reasons for changing demand

A
  • Pref. change
    -No. of cons. changes
    -Inc. distribu. changes
    -Price of another good changes (subs. or compl. goods)
    -which can be comp.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

List reasons for changing supply

A

-No. of suppliers chang. (unable to supp. as much)
-Price of so. produ. factors changes
-Tech. changes
-Change in wealth. /seas.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

TRUE OR FALSE: Supply is revenue curve

A

-FALSE, supply is MC curve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Describe a demand curve, where demand is reducing

A

-price and quant. reduce
-so the curve shifts to the left

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Describe a supply curve, where supply has increased

A

-price reduces, quantity increase (more supply)
-curve move 2 right

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

‘Market equilibirum is economically efficient.’ Explain this phrase

A

-Qunatity demanded (supplied) is max. at price supp. willing to pay
-Price that the customer willing to pay, with the highest demand
-we all win

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

TRUE or FALSE: Market quilibrium is efficient but not pareto efficient

A

-FALSE: it is pareto efficient

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

‘Market equilibrium is pareto efficient.” Explain this phrase-

A
  • amount prod. wanna supp. at certain price
    -is same amount. buy. wanna b uy at certain price
    -Total surplus is max.
    -Ask Leaonie
    If less is produced than, not all consumers get what they want → missed opportunities.

If more is produced, producers can’t sell everything at a good price → wasted resources.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Explain what a monopoly is

A

-one supplier
-price setter

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

List reasons for a monopoly

A
  1. Tech. Monop.
  2. Leg. Monop.
  3. Nat. Monop.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Explain what a technological monopoly is

A
  • one firm contr.
    -manuf. methods
    OR
    -has exc. rights over the technology used to manufacture it
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Explain what a natural monopoly is

A

-without abus. practic.
-occurs due to scale adv. (more efficient 2 have one)

19
Q

TRUE or FALSE: ATC is lowest when production is minimal in monopolies

A

-FALSE: ATC is lowest when production reaches max. market size
(spread over, think fixed costs)

20
Q

Explain the advantages of a natural monopoly

A

-Low(er) produc. costs vs. perf. compet.
-scale advantage effect

21
Q

TRUE or FALSE: the scale advantage effect is when ATC lowered across big produc.

22
Q

TRUE or FALSE: ATC is Lowest when Production reaches maximum, in monopoly

23
Q

Explain a disadvantage of (natural) monopolies

A

-low produ. cost (scale effect)

24
Q

TRUE or FALSE: Perfect competition is an efficient substitute for natural monopolies

25
Explain how one can counter the high prices of nat. monop.
-Regulation- Tariffs
26
Explain why marginal revenue decreases in a monopoly8
-Monopolist is Price Sett. -but cannot set price at whtv. (hv 2 adj. 4 demand) -reduce price--> more demand -rev. of each unit decreases (MR decreases)
27
TRUE or FALSE: Monopoly causes more welfare costs for monopolists
-TRUE -2 maintain their dominant position
28
Explain what X-inefficiency is
- relat. weak incentive 2 control costs
29
Explain what dynamic inefficiency is
- relat. weak incentive 2 innovate
30
Explain the economic basis of comp. law
- W: higher welfare - less comp. = more deadweight loss -red. this -higher welfare!!!! -D: distortion of competition -prevent dist. of competition
31
Explain what oligopoly is
- mark. where there are few suppliers
32
List types of oligopoly
-Homogenous oligopoly -Heterogenous Oligopoly
33
Explain what a homogenous oligopoly is
- Few supp. -IDENT. products
34
Explain what a heterogenous oligopoly is
-Few supp. -COMP. products (non-identical, differentiated)
35
Explain the statement "there is no one unequivocal oligopoly theory"
- No, sing. theory on how oligopolies behave -CARTEL: (a few supp. coord. btwn each other 2 fix pric. or quantities -earning excess profits -Perf. Comp.
36
TRUE or FALSE: Oligopoly in a perfect- competiton situation faces the collective action problem
-FALSE/ cARTEL PRONLE
37
Explain the collective action problem
-HARDER to ENFORCE. in Large group -applies to cartels
38
Explain why cartels are economically unstable
Free Riding: One company might secretly produce more than agreed, to make more money. Collective-Action Problem: It’s hard to keep everyone in line, especially in big groups. Cartels work better when only a few companies are involved — easier to watch and control. Entry of New Competitors: High cartel prices mean big profits. That attracts new companies who want a share. New firms increase supply, which lowers the price and ruins the cartel’s plan
39
List types of oligopoly behav iours
1. Product differentiation (coca light vs. coca zero + eneco vs. Frivius) 2. Firms coordinating (e.g: mergers) 3. Cartel
40
Explain how monopolies naturally invoke the entry of new firms
-EXCESS PROF. -more initial excess profit -entry by new firms
41
Explain the graph on monopolies once (excess) profits attract newcomers
- take away demand from exity firm -demad curve shifts to less -smal
42
How does a monopolist maximise profit?
-Find point where MC=MR -then increase vertically till intersect demand curve
43
Explain why the MR curve is downward sloping in Monopolies?
-Because the Monopolist can set the price