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42 Cards in this Set
- Front
- Back
What is Monopolistic Competition? (Chap. 10) |
When; 1.) There are many firms 2.) They sell similar (Not Same) products |
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How is the shape of the demand curve Monopolistic Competition? (Chap. 10) |
On a graph of Price= X axis & Quantity= Y axis, Demand is constant/a straight horizontal line |
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How does the game theory of an Oligopoly work? (Chap. 10) |
Where companies must make decisions & then receive payoffs based on what other companies decide to do (either cooperate, or pursue self-interest) |
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Collude (Chap. 10) |
There is no competition here, bc the companies come together |
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Prisoner's Dilemma (Chap. 10) |
Where are the games from cooperation are larger then the rewards from pursuing self-interest |
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Merger (Chap. 11) |
When 2 businesses come together, the 2 businesses have to be about the same in size to come together |
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What is a similarity & the differences between a Merger & an Aquisition (Chap. 11) |
-They both involve combining -Although, Merger is 2 firms same size (or one is buying the other out) merging/coming together, & Aquisition is where a firm, mostly bigger, buys out another, mostly smaller |
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Aquisition (Chap. 11) |
Where a firm aquires, buys out another |
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Antitrust Laws (Chap. 11) |
Restrictions, by gov., on combining industries |
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4 Firm Concentration Ratio (Chap. 11) |
It's just adding the top 4 industry market share, from a list of companies |
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What constitutes an Oligopoly? (Chap. 11) |
If the top 4 (2, or 3) own 90% or higher of the shares of the industry combined |
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Minimum Resale Price Maintenance Agreement (Chap. 11) |
Requires a dealer who buys from a manufacturer to sell for at least a certain minimum price |
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Exclusive Dealing (Chap. 11) |
An agreement that a dealer will sell only products from 1 manufacturer |
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Tying Sales (Chap. 11) |
A situation where a customer is allowed to buy one product only if the customer also buys another product |
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Bundling (Chap. 11) |
A situation in which multiple products are sold as one |
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Cost-Plus Regulation (Chap. 11) |
When regulators permit a regulated firm to cover its costs and to make a normal level profit |
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Price Cap Regulation (Chap. 11) |
When the regulator sets a price that a firm cannot exceed over the next few years |
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What power do Gov. have in Natural Monopolies? (Chap. 11) |
In Natural Monopolies, gov. can only regulate, not control |
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Externalities (Chap. 12) |
Can be Negative or Positive, but they are basically are side effects (negative ex: pollution from buisnesses affecting 3rd party groups) (positive ex: a bee farm's bees pollinate a flower farm's flowers) |
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Pollution Tax (Chap. 12) |
Tax imposed on the quantity of pollution that a firm emits (incentive to reduce pollution) |
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Command-and-control regulation (Chap. 12) |
Laws that specify allowable quantities of pollution & that also may detail which pollution-control technologies one must have (gov. commands them to decrease pollution, & controls it by requiring them to install anti-pollution equipment, etc.) |
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Marketable Permits (Chap. 12) |
(ex: cap-&-trade) A permit that allows a firm to emit a certain amount of pollution (firms can sell & buy permits) |
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How does the economic output & environmental protection trade-off work? (Chap. 12) |
Economic output high, environmental protection is low. Vise-versa |
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How is the economic output & environmental protection trade-off measured? (Chap. 12) |
By Production Possibilities Fronteir (PPF) line |
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What are some negatives of minimum wage? (Chap. 4) |
-unemployment, if minimum wages were set very high |
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Labor demand & supply (Chap. 4) |
X axis= Quantity Wages, Y axis= Quantity Labor, & on graph are Supply Labor positive line & Demand Labor negative line |
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Financial capital demand & supply (Chap. 4) |
X axis= r (interest rate), Y axis= quantity of financial capital. Supply of Lenders is positive slope, & Demand of Borrowers is negative slope |
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Monopsony (Chap. 14) |
When there's only 1 employer/only 1 buyer of labor (they hold market power) |
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Labor Union (Chap. 14) |
Where workers can also have market power, basically opposite to monopsony |
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Discrimination in Labor Market (Chap. 14) |
When, only, workers who have the same position, & skills set, are treated differently |
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Solutions for discrimination in labor market? (Chap. 14) |
-Affirmative Action |
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Immigration, pros & cons (Chap. 14) |
Pros: -immigrating country can gain skilled workers -More ppl in immigrating country result in contributing taxes -home country gains in GDP increase with money sent home from immigrants Con: -home country can lose skilled workers -More ppl in immigrating country result in job displacement for primitive citizens Overall, the benefits of immigration outweigh the costs |
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Liquidity (Chap. 17) |
How easy it is to use it to pay for goods & services (ex: money is more liquidable than stock) |
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Expected Rate of Return (Chap. 17) |
How much a project or an investment is expected to return to the investor, either in future interest payments, capital gains, or increased profitability |
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Actual Rate of Return (Chap. 17) |
The total rate of return, including capital gains & interest paid on an investment at the end of a time period |
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Risk (Chap. 17) |
A measure of the uncertainty of that project's profitability (default risk & interest rate risk) |
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Dividends (Chap. 17) |
A direct payment to a firm's shareholders (for stocks) |
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Stock (Chap. 17) |
A specific firm's claim on partial ownership, shares of the company owned by ppl |
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Bonds (Chap. 17) |
A financial contract where a borrower agrees to repay the amount that it borrowed & also an interest rate over a period of time in the future |
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Capital Gains (Chap. 17) |
A financial gain from buying an asset, like a share of stock or a house, & later selling it at a higher price than bought (the amount of money gained) |
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Dividend vs. Capital Gain (Chap. 17) |
The difference is that dividend is for stock payouts gained, & capital gain is a payout gained for anything, from the money spent |
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Diversification (Chap. 17) |
Buying stocks or bonds from a wide range of companies to reduce the level of risk (can help to cancel out extreme increases & decreases in value) |