The Power of One
A market with one seller and high barriers to entry.
Monopoly
The study of how people or firms behave in strategic situations.
Game Theory
The main way firms in Monopolistic Competition compete without changing price.
Product Differentiation
The demand for labor is this, meaning it's based on the demand for the product.
Derived Demand
A cost or benefit that falls on a third party not involved in the trade.
Externality
For a monopolist, this curve is always below the Demand curve.
Marginal Revenue (MR)
A situation where each player chooses the best strategy given the strategies of others.
Nash Equilibrium
In the long run, this firm's price is equal to ATC but not at its minimum, called this.
Excess Capacity
The extra revenue a firm gets from hiring one more worker.
Marginal Revenue Product (MRP)
These goods are non-rival and non-excludable.
Public Goods
Charging different prices to different people to eliminate Consumer Surplus.
Price Discrimination
An agreement among firms to limit output and keep prices high
Cartel (or Collusion)
Like a monopoly, this firm is inefficient because Price is greater than this.
Marginal Cost (MC)
A labor market where there is only one buyer of labor.
Monopsony
The triangle representing the loss of total surplus in an inefficient market.
Deadweight Loss
An industry where ATC is declining across the entire range of market demand.
Natural Monopoly
A strategy that is best for a player regardless of what the other player does.
Dominant Strategy
The process by which Monopolistic Competitors reach zero profit in the long run.
Entry and Exit
This rule states that a firm should hire labor until MRP = MRC
Profit Maximization (Labor)
This kind of tax is used to internalize a negative externality.
per-unit (Pigouvian Tax)
The point on a monopoly graph where MR is zero corresponds to this.
Unit Elasticity (on Demand)
When a firm in an oligopoly follows the price changes of a dominant firm.
Price Leadership
This curve is tangent to the Demand curve in Monopolistic Comp. long-run equilibrium
ATC
If a worker’s MP is 5 and the product price is $10, the MRP is this.
$50
This curve shows the distribution of income in an economy.
Lorenz Curve