Market Structures
Market structure with many firms and differentiated products.
What is monopolistic competition?
The rule a monopolist uses to maximize profit.
What is MR = MC?
A market structure with only a few large firms that are interdependent.
What is oligopoly?
he demand for labor that exists because workers help produce goods and services
What is derived demand?
In a perfectly competitive labor market, the firm’s MFC curve looks like this.
What is a horizontal line?
The main feature that allows monopolies to earn long-run economic profit.
What are barriers to entry?
After finding the quantity where MR = MC, the monopolist uses this curve to determine the price.
What is the demand curve?
A strategy that gives a player the best outcome no matter what the other player chooses.
What is a dominant strategy?
The additional revenue a firm earns from hiring one more worker.
What is marginal revenue product (MRP)?
On a monopoly graph, this curve is always below the demand curve.
What is marginal revenue (MR)?
When firms have price-setting power instead of being price takers.
What is imperfect competition?
The extra revenue a firm earns from selling one additional unit of output.
What is marginal revenue (MR)?
The outcome in a payoff matrix where both firms choose their best response to the other firm’s decision.
What is a Nash equilibrium?
The rule a perfectly competitive firm uses when deciding how many workers to hire.
What is MRP = wage (or MRP = MFC)?
On a monopoly graph, deadweight loss appears as this shape.
What is a triangle?
Efficiency that occurs when P = MC.
What is allocative efficiency?
The lost total surplus that occurs because a monopoly produces less than the efficient level of output.
What is deadweight loss?
When firms cooperate to set prices or restrict output to increase profits.
What is collusion?
A labor market where there is only one major employer hiring workers.
What is a monopsony?
In monopolistic competition in the long run, price equals this cost.
What is ATC?
Efficiency that occurs at the minimum ATC.
What is productive efficiency?
When a firm charges different prices to different consumers for the same product.
What is price discrimination?
A table used in game theory that shows the possible outcomes for each combination of strategies.
What is a payoff matrix?
The additional cost to a firm of hiring one more worker.
What is marginal factor cost (MFC)?
In a monopsony graph, the firm hires workers where these two curves intersect.
What are MRP and MFC?