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Final Practice 2
Terms in this set (11)
HHI closer to 0 means...
not concentrated (competitive)
Many firms of relatively equal size
HHI closer to 2,500-10,000 means...
Max: 10,000...when market's controlled by a single firm
When economies of scale are Big, firms can reduce their Ave TC by....
Merging into an even larger firm!!
NOT: selling off subsidiaries, eliminating bureaucratic costs, or hiring pro managers
1. large number of firms, each is small relative to the entire market
2. firms are price-takers
3. homogenous goods
4. both C4 & HHI are close to 0!!
P - MC / P
Can a manager of a Monopoly charge any price & customers still have to buy it?
No. Once the monopoly has chosen the price, the customers will only buy a level of output stipulated by the demand curve.
Consumers will not buy whatever the monopoly puts to the market once the price is fixed.
Firms that have market power:
Sources of monopoly power:
economies of scale
economies of scope
Would you expect the demand for a monopolistically competitive firm's product to be more or less elastic than that for a monopolist's product?
In general, the demand for a Monopolistically Competitive firm's product should be MORE ELASTIC than that of a Monopolist's product....
because there are close substitutes for the former but not for the latter. The existence of close substitutes makes a monopolistically competitive firm's quantity demanded more responsive to price.
In a finitely repeated game with a certain END period, collusion is UNLIKELY because...
bc effective punishments can't be used during any time period
Underwear Bomber rule
In an infinitely repeated game...
you have to see if collusion or cheating is better (not just take Nash)
THIS SET IS OFTEN IN FOLDERS WITH...
Midterm pt 1
Final Slide deck 1
Final slide deck 2 Monopoly
Final Practice 1
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