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Common barriers to market entry
control of scarce resources, legal barriers, high startup costs
Monopoly
market structure where there is only one firm producing a product
Natural Monopoly
has large fixed costs, and long economies of scale, has downward sloping ATC curve
Price Determination
occurs in specific industries as consumers pay a different price for the same good
Imperfect Price Discrimination
charging consumers different prices based on the buyer’s willingness to pay
Perfect Price Discrimination
charges all consumers the maximum they are willing to pay, no deadweight loss, produce at P=MC
Monopolistic Competition
another term for imperfect competition, and occurs when many companies offer competing products which are similar but not perfect substitutes
Oligopoly Characteristics: Interdependent
all the actions that a firm takes will affect the other firms in the oligopoly
Oligopoly Characteristics: Cartel
a group that agrees to control the price and output of a product (often form in oligopoly)
Oligopoly Characteristics: Collusion
working together to maximize profit
Game Theory: Payoff Matrix
represents the payoff to each player to show combinations of given strategies
Game Theory: Dominant Strategy
the strategy that has a better payoff regardless of what strategy the opponent chooses
Game Theory: Nash Equilibrium
point where both players can do no better than the other given the choice of their opponent
Natural Monopoly Production Point
MR=MC
Government force monopoly to set price at:
ATC=D
