Imperfect Competition

Flashcards covering key vocabulary and concepts related to the lecture on imperfect competition.

Imperfect Competition

A market structure where firms have some control over the price of their product, as opposed to being price takers.

Market Power

The ability of buyers or sellers to affect prices; sellers with market power can set prices above marginal costs.

Perfect Competition

A market structure characterized by many firms producing homogeneous goods, with no barriers to entry or exit.

Monopoly

A market structure dominated by a single seller, which has significant market power and faces a downward-sloping demand curve.

Welfare Analysis

The study of economic policies and their effects on the welfare of individuals in a market, often focusing on efficiency and equity.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved, often in the context of monopoly pricing.

Lerner Index

A measure of a firm's market power, calculated as the difference between price and marginal cost, divided by the price.

Elasticity Pricing Rule

A principle that states that the markup over marginal cost is inversely related to the price elasticity of demand.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market, which can include legal restrictions, economies of scale, and capital requirements.

Minimum Wage

A mandated lowest hourly wage that employers must pay their employees, which can have varying effects in competitive and monopsonistic labor markets.