Monopoly and Antitrust Policy

A comprehensive set of flashcards covering key vocabulary and concepts related to monopoly and antitrust policy in microeconomics.

Monopoly

An industry with a single firm where entry of new firms is blocked.

Market Power

An imperfectly competitive firm’s ability to raise prices without losing all quantity demanded.

Oligopoly

An industry characterized by a small number of firms, each large enough to affect prices.

Natural Monopoly

An industry where a single firm can produce at a lower cost than multiple firms due to large economies of scale.

Price Discrimination

Charging different prices to different buyers for identical products.

Antitrust Policy

Government guidelines to prevent monopolistic behavior and promote competition.

Deadweight Loss

The social cost associated with the distortion in consumption from monopoly pricing.

Perfect Price Discrimination

Charging each buyer the maximum they are willing to pay.

Rent-Seeking Behavior

Actions taken by firms to maintain economic profits through manipulation of the government.

Rule of Reason

A legal standard used to determine whether a business practice is anti-competitive.

Clayton Act

A 1914 law that strengthened the Sherman Act by outlawing specific monopolistic practices.

Federal Trade Commission (FTC)

A federal agency created to enforce antitrust laws and prevent unfair business practices.

Barriers to Entry

Factors that make it difficult for new firms to enter a market.

Imperfectly Competitive Industry

An industry where firms have some control over pricing.

Focus Group

A diverse group of people providing feedback on a product to assist in market research.

Economies of Scale

Cost advantages that a firm obtains due to scale of operation.

Network Externalities

The increased value of a product as more people use it.

Trial and Error Pricing

A method to determine price by testing different prices in the market.

Long-Run Average Cost (LRAC)

The per unit cost of production when all inputs can be varied.

Identifiable Groups

Distinct segments of consumers targeted through price discrimination.