17 terms


a market structure in which one firm makes up the entire market. the firm faces no competitive pressure from other firms.
Difference between Monopoly and perfect competitor
A competitive firm does not take into account the effect of its output decision on the price it receives. a competitive firm's marginal revenue is the given market price. a monopolistic firm takes into account that its output decision can affect price. its marginal revenue is not its price.
an exclusive right to something
price discrimination
to change different prices to different individuals of groups of individuals
Natural Ability
A barrier to entry that might exist is that a firm is better at producing a good than anyone else. it has unique abilities that make it more efficient than all other firms.
natural monopoly
an industry in which a single firm can produce at a lower cost than can 2 or more firms
market structure
the physical characteristics of the market within which firms interact
monopolistic competition
1) many sellers 2) differentiated products 3) multiple dimensions of competition 4) easy entry of new forms in the long run.
oligopolistic firms
mutually interdependent and can be collusive or non-collusive
strategic decision making
taking explicit account of a rival's expected response to a decision you are making
a combination of firms that acts as if it were a single firm, (a shared monopoly)
cartel model of oligopoly
a model that assumes that oligopolies act as if they were monopolists that have assigned output quotas to individual member firms of the oligopoly so that total output is consistent with joint profit maximization.
implicit collusion
multiple firms make the same pricing decisions even though they have not explicitly consulted with one another
kinked demand curve
the marginal revenue curve must have a gap
contestable market model
a model of oligopoly in which barriers to entry and carriers to exit, not the structure of the market, determine a firm's price and output decisions.
concentration ratio
the value of sales by the top firms of an industry stated as a percentage of total industry sales
Herfindahl index
an index of market concentration calculated by adding the squared value of the individual market shares of all the firms in the industry.