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11 Cards in this Set
- Front
- Back
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market power (monopoly power)
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market situation in which an individual firm faces a downward-sloping demand curve for its product
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pure monopoly
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product market in which a single firm comprises the entire industry and has complete control over price and other market outcomes
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average revenue curve
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individual firm's demand curve
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profit-maximizing output rule
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firm produces the output at which marginal revenue equals marginal cost (and charges the price on its demand curve corresponding to this output)
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contrived scarcity
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market situation generated by a pure monopolist (or any firm with market power) in which the monopolist (firm) consciously reduces its output below the efficient level of output to maximize its profit
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effective market (monopoly) power
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ability to a firm maintain an economic profit in the long run
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rent seeking
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pursuit of profitable market opportunities by entrepreneurs that is directed toward unproductive, socially wasteful ends
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price discrimination
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charging different customers different prices that are unrelated to differences in the cost of serving the customers
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windfall (excessive) profit
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return to capital over and above the opportunity cost of capital that society considers to be excessive
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natural monopoly
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market situation in which the MES (minimum of the long-run average cost curve) of a single firm is at or beyond the entire market demand for the product
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benefits-received principle
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pricing principle for public services, which says that citizens should pay for public services in accordance with the benefits they receive from them
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