Chapter 8 - Microeconomics
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Created by:
trevorskidmore on December 2, 2011
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15 terms
Terms | Definitions |
|---|---|
 cost-plus regulation | a method of regulation under which the regulated firm is permitted to charge a price equal to its explicit costs of production plus a markup to cover the opportunity cost of resources provided by the firm's owners |
| hurdle method of price discrimination | the practice by which a seller offers a discount to all buyers who overcome some obstacle |
| marginal revenue | the increase in total revenue obtained by producing and selling one more unit of output |
| market power | a firm's ability to raise the price of a good without losing all its sales |
| monopolistic competition | a market structure in which a large number of firms sell slightly differentiated products that are reasonably close substitutes for one another |
| natural monopoly | a monopoly that results from economies of scale |
| oligopoly | a market in which there are only a few rival sellers (each of which is called an oligopolist) |
| perfect hurdle | one that completely segregates buyers whose reservation prices lie above some threshold from others whose reservation prices lie below it, imposing no cost on those who jump the hurdle |
| perfectly discriminating monopolist | a firm that charges each buyer exactly his or her reservation price |
| price discrimination | the practice of charging different buyers different prices for essentially the same good or service |
| price setter or imperfectly competitive firm | a firm with at least some latitude to set its own price |
| price taker or perfectly competitive firm | a firm that has no influence over the price of the product it sells |
| pure monopoly | a market in which there is only one supplier of a unique product with no close substitutes |
| rule for profit maximization | profits are maximized at the quantity of output where marginal revenue equals marginal cost |
| technical efficiency in production | a condition that occurs when the least possible amounts of inputs are used to produce a given level of output |
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