EXAM #3 Flashcards
Characteristics of perfect competition
1) many firms
2) homogenous products
3) free entry and exit
Characteristics of oligopoly
1) few sellers
2) highly similar products
3) barriers to entry
Characteristics of monopoly
1) 1 firm (sole supplier)
2) price maker
3) barriers to entry
Characteristics of monopolistic
1) many firms
2) differentiated products
3) free entry and exit
What does it mean if a demand curve is steep?
the market has NO close substitute
What does it mean if a demand curve is NOT steep?
it has close substitute
What does the dominant strategy do?
you should always do it REGARDLESS what the other player do
Difference between exit and shut-down?
shutting down is temporary to limit economic loss, exit is permanently leaving the market
How to find the Q and P optimal ?
where MR and MC meet, go up until you hit the demand curve
Difference between long-run and short-run on a graphic?
No profit in the long-run
Why is there no profit in the long-run?
because more firms joins, the demand drop below the the ATC
What happen when P > MC=MR ?
excess capacity and dead-weight loss
