Last 1/3 of class terms

learner’s index

measure of “monopoly power” to raise price over MC, inversely proportional to the elasticity of demand: less elastic D → more monopoly power.

First degree price discrimination

perfect, charge each consumer his willingness-to-pay

Third Degree

different prices in naturally separated markets

Second-Degree

convince higher WTP consumers to pay a higher markup by changing the good in some way (business v economy class)

return to scale

how a firm's output changes as it increases or decreases its inputs (labor, capital, etc.).

Constant returns to scale

Output increases in proportion to input increases. For example, if a factory doubles its inputs (labor, capital, etc.), its output will also double. AC constant

Increasing returns to scale

Output increases more than proportionally to input increases. For example, if a factory doubles its inputs, its output may more than double. AC increases

Decreasing returns to scale

Output increases less than proportionally to input increases. For example, if a factory doubles its inputs, its output may increase by less than double. AC decreases

Monopsony

one buyer:Upward Sloping Supply of L.

To increase L, increase w

w increase for inframarginal L

Produce where w < MRPL

inframarginal

choices, agents, or activities situated below the margin

Bertrand competition

an oligopolistic market model where firms compete on price rather than quantity, assuming identical products and identical marginal costs