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15 Cards in this Set
- Front
- Back
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Barrier to Entry |
Anything that keeps new firms from entering an industry in which firms are earning economic profits. |
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Business Strategy |
Actions that a firm takes to achieve a goal, such as maximizing profits.
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Cartel |
A group of firms that collude by agreeing to restrict output to increase prices and profits.
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Collusion |
An agreement among firms to charge the same price or otherwise not to compete.
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Cooperative Equilibrium |
An equilibrium in a game in which players cooperate to increase their mutual payoff.
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Dominant Strategy |
A strategy that is best for a firm, no matter what strategies other firms use.
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Economies of Scale |
The situation when a firm's long-run average costs fall as it increases the quantity of output it produces.
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Game Theory |
The study of how people make decisions in situations in which attaining their goals depends on their interactions with others; in economies, the study of the decisions of firms in industries where the profits of firm depend on its interactions with other firms. |
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Nash Equilibrium |
A situation in which each firm chooses the best strategy, given the strategies chosen by other firms.
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Non-cooperative Equilibrium |
An equilibrium in a game in which players do not cooperate but persue their own self-interest.
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Oligopoly |
A market structure in which a small number of interdependent firms compete. |
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Patent |
The exclusive rights to a product for a period of 20 years from the date the patent is filed with the government. |
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Payoff Matrix |
A table that shows the payoffs that each firm earns from every combination of strategies by the firms. |
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Price Leadership |
A form of implicit collusion in which one firm in an oligopoly announces a price change and the other firms in the industry match the change. |
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Prisoner's Dilemma |
A game in which pursuing dominant strategies results in noncooperation that leaves everyone worse off. |
