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21 Cards in this Set
- Front
- Back
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perfectly competitive market
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a market that meets the conditions of 1) many buyers and sellers, 2) all firms selling identical products, and 3) no barriers to new firms entering the market
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monopolistically competitive market
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a market that structure in which barriers to entry are low and many firms compete y selling similar but not identical, products.
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oligopoly
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a market structure in which a small number of interdependent firms compete
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monopoly
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a firm that is the only seller of a good or service that does not have a close substitute
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marginal revenue (MR)
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the change in total revenue from selling one more unit of a product
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shut-down point
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the minimum point on a firm's average variable cost curve; if the price falls below this point, the firm shuts down production in the short run
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long run equilibrium
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the situation in which the entry and exit of firms has resulted in the typical firm breaking even
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barrier to entry
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anything that keeps new firms from entering an industry in which firms are earning economic profit
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economies of scale
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the situation when a firm's long-run average cost fall as the firm increases output
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patent
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the exclusive right to a product for a period of 20 years from the date the patent is filed with the government
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copyright
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a government granted exclusive right to produce and sell a creation
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public franchise
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a government designation that a firm is the only legal provider of a good or service
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game theory
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the study of how people make decisions in situations in which attaining their goals depends on their interactions with others; in economics, the study of the decisions of firms in industries where the profits of a firm depend on its interactions with other firms.
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payoff matrix
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a table that shows the payoffs that each firm earns from every combination of strategies by the firm
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dominant strategy
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a strategy that is best for a firm, no matter what strategies other firms use.
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Nash equilibrium
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a situation in which each firm chooses the best strategy, given the strategies chosen by other firms.
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cooperative equilibrium
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an equilibrium in a game in which players cooperate to increase their mutual payoff
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non-cooperative equilibrium
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an equilibrium in a game in which players do not cooperate but pursue their own self-interest
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prisoner's dilemma
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a game in which pursuing dominant strategies results in noncooperation that leaves everyone worse off
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network externalities
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a situation in which the usefulness of a produce increases with the number of consumers who use it
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natural monopoly
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a situation in which economies of scale are so large that one firm can supply the entire market at a lower average total cost that can two or more firms
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