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21 Cards in this Set
- Front
- Back
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Monopoly
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An industry structure where only one firm provides a good or service that has no close substitutes.
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Legal Market Power
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Legal Market Power occurs when a firm obtains market power through barriers to entry created not by the firm itself, but by the government.
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Patent
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A patent is the privilege granted to an individual or company by the government, which gives them sole right to produce and sell a good.
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Copyright
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A copyright is the exclusive right granted by the government to an author's intellectual property.
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Rent Seeking
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The pursuit of monetary gain withough active production, such as charging a rental fee for use of land.
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Key Resource
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A key resource is a material that is essential for the production of a good or service.
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Network Externality
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A network externality occurs when a product's value increases as more consumers begin to use it.
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Economies of Scale
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Economies of scale occur when average total cost per unit of output decreases as total output increases.
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Natural Monopoly
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A natural monopoly is a market in which a monopoly automatically emerges due to large economies of scale.
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Price Makers
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Price makers set the price of a good after they determine how much to produce.
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Deadweight Loss
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The deadweight loss is a cost imposed on society due to market inefficiency.
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Price Discrimination
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Price discrimination occurs when firms charge different consumers different prices.
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Perfect (First degree) Price Discrimination
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Perfect price discrimination occurs when a firm charges each buyer exactly his or her willingness to pay.
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Arbitrage
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Arbitrage is the ability to make money through market discrepancies.
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Third degree price discrimination
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Third degree price discrimination occurs when price varies by customer or location attributes (essentially, from correlations in collected data: male female, tall short, etc).
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Second degree price discrimination
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Second degree price discrimination occurs when the same consumer is charged different prices for different units of a good.
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Vertical Merger
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A vertical merger is the joining of two firms in different stages of production or distribution of a product.
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Horizontal Merger
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A horizontal merger joins two competing firms in the same industry.
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Conglomerate Merger
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A conglomerate merger is a merger that is neither horizontal nor vertical -- the joining of companies unrelated by the products they produce.
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Efficient or Socially Optimal Price
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Price set at the marginal cost.
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Fair Returns Price
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A price set at the ATC.
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