C. Market Structures Flashcards
Oligopoly
a market characterized by a small number of firms who realize they are interdependent in their pricing and output policies
Monopoly
power of being the only seller
Monopsony
power of being the only buyer; not a price taker
Risk
anything that affects the outcome of your choices that can associated with a probability
Risk perception
how our experiences (socialization, advertising, etc.) impact how we value risk
Specialization
individuals dividing up labor within/across trades
Division of labor
increases productivity as individuals are better able to become more dexterous when they focus on one task
Absolute advantage
what an individual/nation is absolutely better at; Single market
Comparative advantage
the ability to produce a good at a lower opportunity cost that the person or country one trades with; not necessarily best
Unjust outcomes
unfair outcomes due to inequality of the implementation of rules; working around laws, know someone on the inside, etc.
Assumptions
an abstraction that simplifies a scenario
Strong assumptions
unrealistic assumptions (weak assumptions are more realistic); to relax assumptions we go from strong to weak assumptions
Consumption
the act of deriving utility (sometimes using things, but only with goods)
Constrained Optimization Problem (Charts)
a situation where one maximizes utility in the face of scarcity
Commutative justice
fairness of the rules by which the “market game” is played
