Monopoly and Market Structures Review

These flashcards cover key concepts related to monopoly and various market structures, helping learners understand important economic principles for their upcoming exam.

Monopoly

A market structure where a single seller dominates the market, facing no competition.

Profit-Maximizing Output

The quantity of output produced by a monopolist where marginal cost (MC) equals marginal revenue (MR).

Marginal Revenue (MR)

The additional revenue gained from selling one more unit of output.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Deadweight Loss

The loss of economic efficiency when equilibrium for a good or service is not achieved.

Average Total Cost (ATC)

The average cost of production per unit, calculated as total cost divided by the quantity produced.

Total Revenue (TR)

The total income a firm receives from selling its goods or services, calculated as price per unit multiplied by the number of units sold.

Perfectly Competitive Market

A type of market structure characterized by many buyers and sellers, identical products, and no barriers to entry.

Price Discrimination

Charging different prices to different consumers for the same good or service, based on their willingness to pay.

Tacit Collusion

An unspoken, informal agreement between firms to coordinate their actions or pricing without a formal agreement.

Antitrust Policy

Government regulations designed to prevent monopolies and promote competition in the marketplace.

Game Theory

The study of strategic interactions among agents, used to analyze situations where the outcome depends on the actions of multiple agents.

Nash Equilibrium

A situation in game theory where each player's strategy is optimal given the strategy of the other players.

Excess Capacity

A situation in which a firm produces at less than the efficient scale, resulting in higher average total costs.

Price Leadership

A strategy where one leading firm sets the price for the industry and others follow.

Market Power

The ability of a firm to influence the price of a good or service in the marketplace.

Oligopoly

A market structure characterized by a small number of large firms that dominate the market.

Firms in Monopolistic Competition

Compete by selling differentiated products and can earn profits in the short run but earn zero economic profits in the long run.

Short-Run Equilibrium

A situation where firms in a market operate at a level where demand equals supply, but not necessarily at full economic capacity.

Long-Run Equilibrium

The state where firms in a monopolistically competitive market earn zero economic profit as they have adjusted to market conditions.

Product Differentiation

The process of distinguishing products offered by different firms to make them more attractive to a specific target market.

Price Effect

The change in revenue resulting from a change in price.

Quantity Effect

The change in revenue resulting from a change in the number of units sold.