Market Structures, Game Theory & Strategy, Misc. | AP Micro. MV 2025-2026

Monopoly

One firm, unique product, high barriers to entry.

Natural Monopoly

A single firm can supply the entire market efficiently (e.g., utilities).

Monopolistic Competition

Many firms, differentiated products, low entry barriers.

Oligopoly

Few large firms dominate; interdependent behavior, potential collusion.

Game Theory

Study of strategic interactions between rational players.

Prisoners’ Dilemma

A game where rational actions lead to suboptimal outcomes.

Monopsony

One buyer in a market (e.g., single employer in a small town).

Circular Flow Model

Diagram showing interactions between households and firms.

Production Possibilities Frontier (PPF)

All possible efficient output combinations.

Law of Increasing Opportunity Cost

As more of a good is produced, the opportunity cost rises.

Normal Profit

Minimum profit needed to keep a firm in business; occurs when economic profit = 0.