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16 Cards in this Set
- Front
- Back
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Price setter |
A firm with at least some latitude to set its own price |
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Imperfectly competitive firms |
Firms that differentiate their products from those of their rivals, with whom they compete |
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Pure monopoly |
The only supplier of a unique product with no close substitutes |
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Oligopolist |
A firm that produces a product for which only a few rival firm produce close substitutes |
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Monopolistically competitive firm |
One of a large number of firms that produce slightly differentiated products that are reasonably close substitutes for one another |
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Market power |
A firms' ability to raise the price of a good without losing all its sales |
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Constant returns to scale |
A production process is said to have constant returns to scale if, when all inputs are changed by a given proportion, output changes by the same proportion |
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Increasing returns to scale |
A production process is said to have increasing returns to scale if, when all inputs are changed by a given proportion, output changes by more than that proportion; also called economies of scale |
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Natural monopoly |
A monopoly that results from economies of scale |
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Marginal revenue |
The change in a firm's total revenue that results from a one-unit change in output |
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Price discrimination |
The practice of charging different buyers different prices for essentially the same good or service |
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Perfectly discriminating monopolist |
A firm that charges each buyer exactly his or her reservation price |
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Hurdle method of price discrimination |
The practice by which a seller offers a discount to all buyers who overcome some obstacle |
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Perfect hurdle |
A threshold that completely segregates buyers whose reservation prices lie above it from others whose reservation price lie below it, imposing no cost on those who jump the hurdle |
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X-inefficiency |
Where market power results in inefficient production rather than higher profits |
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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 mark-up to cover the opportunity cost of resources provided by the firm's owners |
