Set: Econ Ch 8

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All 13 terms

TermDefinition
concentration ratiothe percentage of industry sales accounted for by the four (or eight) largest firms in an industry; a measure of monopoly power
marginal revenuethe increase in revenue accruing to the firm from selling an additional unit of its product
profitsthe difference between total revenue and total cost; maximized by producing the output at which marginal revenue equals marginal cost
deadweight welfare loss due to monopolythe reduction in social welfare due to the exercise of monopoly power
barriers to entryimpediments to the entry of new firms into a market, such as product differentiation and government licensing, usually by monopolists to protect their favored positions
network economiessituation in which the value of a product to a consumer is enhanced when others also choose to consume the same product
average costratio of costs to the number of units being produced, sometimes called the per-unit cost
economies of scalesituation that occurs when long-run average cost can be reduced simply by increasing the firm's size and producing more of the product
diseconomies of scalesituation that occurs beyond a certain size and production level, when average cost rises as production is increased
natural monopolyan industry in which the average cost of production is minimized by having only one firm produce the product
capture theory of regualtionthe belief that regulatory agencies, regardless of their initial intentions, eventually come to serve the interests of the firms being regulated rather than the interests of the general public
corporationsfirms organized as legal entities separate from their owners, the stockholders, who, by law, have limited liability
stock optionsguarantees issued by a corporation which allow the holder to purchase a set number of shares at a fixed price, often called the strike price; often used as a form of managerial compensation

Set Information

Terms 13
Creator spikelaShay
Created October 22, 2008
Groups None
Subject economics
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Most Missed Words

  1. deadweight welfare loss due to monopoly the reduction in social welfare due to the exercise of monopoly power - 2 misses
  2. average cost ratio of costs to the number of units being produced, sometimes called the per-unit cost - 1 miss
  3. barriers to entry impediments to the entry of new firms into a market, such as product differentiation and government licensing, usually by monopolists to protect their favored positions - 1 miss
  4. marginal revenue the increase in revenue accruing to the firm from selling an additional unit of its product - 1 miss
  5. capture theory of regualtion the belief that regulatory agencies, regardless of their initial intentions, eventually come to serve the interests of the firms being regulated rather than the interests of the general public - 1 miss
  6. corporations firms organized as legal entities separate from their owners, the stockholders, who, by law, have limited liability - 1 miss
  7. economies of scale situation that occurs when long-run average cost can be reduced simply by increasing the firm's size and producing more of the product - 1 miss