Chapter 9: MONOPOLISITIC COMPETITION + OLIGOPOLY Flashcards

1
Q

Firms that charge market price because they have no incentive to charge more.

A

price-taker

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2
Q

Firms that can charge greater prices than their costs.

A

price-maker

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3
Q

A product that consumers perceive as distinctive in some way

A

differentiated product

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4
Q

Any action that firms do to make consumers think their products are different from their competitors’

A

product differentiation

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5
Q

Firms and organizations that fall between the extremes of monopoly and perfect competition

A

imperfectly competitive

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6
Q

Many firms competing to sell similar but differentiated products

A

monopolistic competition

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7
Q

When a few large firms have all or most of the sales in an industry

A

oligopoly

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8
Q

A type of oligopoly in which two firms dominate a market

A

duopoly

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9
Q

When two large firms that produce similar products make a formal agreement to come together and act like a monopoly

A

cartel

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10
Q

The markup divided by marginal costs; shows how much more profit firms are making than their marginal cost; (P - MC) / MC

A

markup ratio

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11
Q

A measure of how much profit a firm makes in excess of the opportunity cost of their investments.

A

rate of economic profit

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12
Q

A group of firms that collude to produce the monopoly output and sell at the monopoly price

A

cartel

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13
Q

When firms act together to reduce output and keep prices high

A

collusion

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14
Q

This strategy is triggered by one player defecting on an agreement; initial cooperation, then one player defects, then the other player defects in response

A

trigger strategy

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15
Q

A type of trigger strategy in which a player defects permanently if the other player defects even once

A

grim strategy

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16
Q

In game theory, when both players want to assure each other that they will use the strategies that result in the mutually beneficial outcome

A

assurance game

17
Q

When one player defects, the other player defects for the next round, then both players return to cooperation; a type of trigger strategy that is less harsh than the grim strategy

A

tit for tat

18
Q

A perceived demand curve that arises when competing oligopoly firms commit to match price cuts, but not price increases

A

kinked demand curve

19
Q

A game in which the gains from cooperation are larger than the rewards from pursuing self-interest

A

prisoner’s dilemma