Market Structures pt. 2

Pareto Optimal

is an

economic state where resources cannot be reallocated to make one individual better off without making at least one individual worse off.

what graph is this?

Monopoly Graph

Monopoly Profit

is the excess profit, or supernormal profit, that a firm can earn by being the sole provider of a good or service in a market. The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue (MR) equals marginal cost (MC).

NATURAL MONOPOLY

is a type of monopoly in an industry or sector with high barriers to entry and large start-up costs that prevent rivals from competing. Because of these conditions, only one producer can operate efficiently in the market.

Economies of Scale

refer to the cost advantages a company gains with the increase in production. This happens because production costs can now be spread over a large number of goods. The bigger the size of a company, the bigger the more the cost savings with the increase in production.

Oligopoly

is when a few companies exert significant control over a given market. Together, these companies may control prices by colluding with each other, ultimately providing uncompetitive prices in the market.