Monopoly, Oligopoly and Monopolistic Competition Flashcards
(43 cards)
Explain what a producer surplus is
-Difference between Pe and price that entr. want to receive
Explain what a total surplus is
-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
TRUE or FALSE: there is a metric to determine total welfare
-TRUE, total surplus
-Total surplus= cons. surplus + produ. surplus
TRUE or FALSE: Ceteris Paribus means that the market is still and predictable
FALSE: means that if noth. changes in the circ. equi. remains
Explain what a consumer surplus is
Difference between Pe and price that consumers are will. to pay
List the two main umbrella terms for why equilbirum changes
-Changing demand
-Changing Supply
List reasons for changing demand
- Pref. change
-No. of cons. changes
-Inc. distribu. changes
-Price of another good changes (subs. or compl. goods)
-which can be comp.
List reasons for changing supply
-No. of suppliers chang. (unable to supp. as much)
-Price of so. produ. factors changes
-Tech. changes
-Change in wealth. /seas.
TRUE OR FALSE: Supply is revenue curve
-FALSE, supply is MC curve
Describe a demand curve, where demand is reducing
-price and quant. reduce
-so the curve shifts to the left
Describe a supply curve, where supply has increased
-price reduces, quantity increase (more supply)
-curve move 2 right
‘Market equilibirum is economically efficient.’ Explain this phrase
-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
TRUE or FALSE: Market quilibrium is efficient but not pareto efficient
-FALSE: it is pareto efficient
‘Market equilibrium is pareto efficient.” Explain this phrase-
- 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.
Explain what a monopoly is
-one supplier
-price setter
List reasons for a monopoly
- Tech. Monop.
- Leg. Monop.
- Nat. Monop.
Explain what a technological monopoly is
- one firm contr.
-manuf. methods
OR
-has exc. rights over the technology used to manufacture it
Explain what a natural monopoly is
-without abus. practic.
-occurs due to scale adv. (more efficient 2 have one)
TRUE or FALSE: ATC is lowest when production is minimal in monopolies
-FALSE: ATC is lowest when production reaches max. market size
(spread over, think fixed costs)
Explain the advantages of a natural monopoly
-Low(er) produc. costs vs. perf. compet.
-scale advantage effect
TRUE or FALSE: the scale advantage effect is when ATC lowered across big produc.
TRUE
TRUE or FALSE: ATC is Lowest when Production reaches maximum, in monopoly
- TRUE
Explain a disadvantage of (natural) monopolies
-low produ. cost (scale effect)
TRUE or FALSE: Perfect competition is an efficient substitute for natural monopolies
-FALSE