Lecture 18: Market Power

These flashcards cover key terms and definitions related to market power, economic models, and related policies as discussed in Lecture 18.

Market Power

The ability of a firm to set prices above marginal cost, affecting market equilibrium.

Deadweight Loss (DWL)

The loss of economic efficiency when equilibrium is not achieved or not achievable.

Antitrust Policy

Laws aimed at regulating and preventing anticompetitive practices in the market.

Natural Monopoly

A market structure where a single firm can supply the entire market at a lower average cost than two or more firms.

Price Elasticity of Demand

The responsiveness of the quantity demanded to a change in price, calculated as the percentage change in quantity divided by the percentage change in price.

Equilibrium Price

The price at which the quantity demanded by consumers equals the quantity supplied by producers.

Inelastic Demand

Demand that is less responsive to price changes; a firm with this demand has more market power.

Reservation Wage Curve

The minimum wage at which a worker is willing to accept a job, reflecting their opportunity cost.

C(Q)

Cost function that shows the cost of producing Q quantity of goods.

Intellectual Property Rights

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