Chapter 6 Flashcards
What is mutual interdependence?
Mutual interdependence is the relationship among oligopolists in which the actions of each business affect the other businesses.
What is market share?
Market share is a business’s proportion of total market sales.
What is the kinked demand curve?
A kinded demand curve is a demand curve with two segments, one fairly flat and one steep, that is typical of rival oligopolists.
What is price leadership?
Price leadership is an understanding among oligopolists that one business will initiate all price changes in the market and the others will follow by adjusting their prices and outputs accordingly.
What is collusion?
Collusion is when oligopolists are acting together as if they are a monopoly.
What is a cartel?
A cartel is a union of oligopolists who have a formal market-sharing agreement.
What is average-cost pricing?
Average-cost pricing is the practice of setting price where it equals average cost.
What is accounting-profit rate?
Accounting-profit rate is a measure of a business’s profitability calculated as its accounting profit divided by owner’s equity.
What is fair rate of return?
A fair rate of return is the maximun accounting-profit rate allowed for a regulated monopoly.
What is game theory?
Game theory is an analysis of how mutally interdependent actors try to acheive their gaols through the use of strategy.
What is prisoner’s dilemma?
Prisoner’s dilemma is a classic example of how player’s self interested actions can be self defeating.
What are contestable markets?
Contestable markets are those in which the threat of new entrants is credible.
What is anti-combines legislation?
Anti-combines legislation are laws aimed at preventing industrial concentration and abuses of market power.
What is a horizontal merger?
A honrizontal merger is a combination of former rivals.
What is a vertical merger?
A vertical merger is a combination of a business and its supplier.
