Chapter 10: Monopolistic Competition and Oligopoly

These flashcards cover key concepts related to monopolistic competition and oligopoly, focusing on characteristics, strategies, and market structures.

Monopolistic Competition

A market structure characterized by many small sellers, differentiated products, and easy entry and exit.

Price Maker

A firm that has some control over the price it charges for its product.

Short Run Equilibrium

A market condition where a firm can earn positive profits, which leads to the entry of new firms.

Non-Price Competition

Strategies used by firms to compete on factors other than price, such as quality and advertising.

Long Run Equilibrium

A condition in which a firm's profits equal zero, leading to prices equal to average total costs.

Economic Scale

The cost advantages that large firms obtain due to their scale of operation.

Kinked Demand Curve

A demand curve that is elastic for price increases and inelastic for price decreases, reflecting firms' reactions to competitors' pricing.

Game Theory

A mathematical framework for strategizing interactions among competing entities, focusing on players, strategies, and payoffs.

Tit-For-Tat Strategy

A strategy in repeated games where a player mimics the opponent's previous move, promoting cooperation.

Cartel

A group of firms that collude to set prices and output levels, which is typically illegal in the United States.