Chapter 13: Monopoly

These flashcards cover key concepts from Chapter 13 on Monopoly, including definitions and characteristics of monopolistic markets.

Monopoly

A market structure characterized by a single seller, selling a unique product in the market.

Barriers to Entry

Obstacles that prevent potential competitors from entering a market.

Price Maker

A firm that has the power to set the price of its product.

Market Power

The ability of a firm to influence the price of its product or the market.

Natural Monopoly

A monopoly that arises from economies of scale in a particular industry.

Marginal Revenue

The additional income received from selling one more unit of a good or service.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded.

Deadweight Loss

The loss of economic efficiency when equilibrium for a good or service is not achieved.

Price Discrimination

The practice of charging different prices for the same good or service to different customers.

First-Degree Price Discrimination

Charging each customer the highest price they are willing to pay.

Second-Degree Price Discrimination

Charging different prices based on the quantity consumed or the product version.

Third-Degree Price Discrimination

Charging different prices to different consumer groups based on elasticity of demand.

Regulation

Government intervention in a market to influence price, quantity, and quality.

Antitrust Laws

Legislation to prevent monopolistic practices and promote competition.

Total Cost (TC)

Fc+Vc

Average Total Cost (ATC)

Total cost divided by the quantity of output produced.

Profit Maximization

A firm's decision to produce the quantity of output that maximizes its profits.

Consumer Surplus

The difference between what consumers are willing to pay and what they actually pay.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in price.

Unitary Elasticity

When the percentage change in quantity demanded is equal to the percentage change in price.

Short-Run Supply Curve in Monopoly

Refers to the optimal level of output and pricing strategy a monopoly uses in the short term.