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Econ 2106-Micro > Exam 3 > Flashcards

Exam 3 Flashcards

1
Q

a producer whose actions have no effect on the market price of the good or service it sells

A

price taking producer

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2
Q

a consumer whose actions have no effect on the market price of the good or service he or she buys

A

price taking consumer

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3
Q

a market in which all market participants are price takers

A

perfectly competitive market

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4
Q

an industry in which producers are price takers

A

perfectly competitive industry

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5
Q

the fraction of the total industry output accounted for by that producer’s output

A

market share

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6
Q

when consumers regard the products of different producers as the same good

A

a standardized product or commodity

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7
Q

an industry has this when new producers can easily enter into an industry and existing producers can easily leave that industry

A

free entry and exit

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8
Q

2 necessary conditions for perfect competition

A
  1. an industry must contain many producers, none of whom have a large market share 2. consumers must regard the products of all producers as equivalent
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9
Q

perfectly competitive industries are normally characterized by

A

free entry and exit

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10
Q

the change in total revenue generated by an additional unit of output

A

marginal revenue

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11
Q

profit is maximized by producing the quantity of output at which the marginal revenue of the last unit produced is equal to its marginal cost

A

optimal output rule

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12
Q

the optimal amount of an activity is the level at which marginal benefit is equal to marginal cost

A

profit maximizing principle of marginal analysis

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13
Q

shows how marginal revenue varies as output varies

A

marginal revenue curve

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14
Q

a price-taking firm’s profit is maximized by producing the quantity of output at which the market price is equal to the marginal cost of the last unit produced

A

price taking firm’s optimal output rule

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15
Q

the ________ of a price taking firm is the market price at which it earns zero profit

A

break even price

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16
Q

equal to minimum average variable cost

A

shut down price (firm will cease production in the short run if the market price falls below this)

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17
Q

shows how an individual producer’s profit-maximizing output quantity depends on the market price, taking fixed costs= as given

A

short-run individual supply curve

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18
Q

shows the relationship between the price of a good and the total output of the industry as a whole

A

industry supply curve

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19
Q

shows how the quantity supplied by an industry depends on the market price given a fixed number of producers

A

short-run industry supply curve

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20
Q

occurs when the quantity supplied equals the quantity demanded, taking the number of producers as given

A

short-run market equilibrium

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21
Q

a market is in ______ when the quantity supplied equals the quantity demanded, given that sufficient time has elapsed for entry into and exit form the industry to occur

A

long-run market equilibrium

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22
Q

shows how the quantity supplied responds to the price once producers have had time to enter or exit the industry

A

long-run industry supply curve

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23
Q

four types of market structures

A

monopoly, oligopoly, monopolistic competition, perfect competition

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24
Q

a firm that is the only producer of a good that has no close substitutes

A

monopolist

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25
Q

an industry controlled by a monopolist

A

monopoly

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26
Q

the ability of a firm to raise prices

A

market power

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27
Q

something that prevents other firms from entering the industry

A

barrier to entry

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28
Q

exists when increasing returns to scale provide a large cost advantage to a single firm that produces all fo an industry’s output

A

natural monopoly

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29
Q

exists when the value of a good or service to an individual is greater when many other people use the good or service as well

A

network externality

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30
Q

gives an inventor a temporary monopoly in the use or sale of an invention

A

patent

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31
Q

gives the creator of a literary or artistic work sole rights to profit from that work

A

copyright

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32
Q

in _____ of a monopoly, the good is supplied by the government or by a firm owned by the government

A

public ownership

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33
Q

limits the price that a monopolist is allowed to charge

A

price regulation

34
Q

there is only one buyer of a good

A

monopsony

35
Q

a firm that is the sole buyer in the market

A

monopsonist

36
Q

offers its product to all consumers at the same price

A

single-price monopolist

37
Q

charging different prices to different consumers for the same good

A

price discrimination

38
Q

takes place when a monopolist charges each consumer his or her willingness to pay (the max that a customer is willing to pay)

A

perfect price discrimination

39
Q

a firm that is the only producer of a good that has no close substitutes

A

monopolist

40
Q

an industry controlled by a monopolist

A

monopoly

41
Q

the ability of a firm to raise prices

A

market power

42
Q

something that prevents other firms from entering the industry

A

barrier to entry

43
Q

exists when increasing returns to scale provide a large cost advantage to a single firm that produces all fo an industry’s output

A

natural monopoly

44
Q

exists when the value of a good or service to an individual is greater when many other people use the good or service as well

A

network externality

45
Q

gives an inventor a temporary monopoly in the use or sale of an invention

A

patent

46
Q

gives the creator of a literary or artistic work sole rights to profit from that work

A

copyright

47
Q

in _____ of a monopoly, the good is supplied by the government or by a firm owned by the government

A

public ownership

48
Q

limits the price that a monopolist is allowed to charge

A

price regulation

49
Q

there is only one buyer of a good

A

monopsony

50
Q

a firm that is the sole buyer in the market

A

monopsonist

51
Q

offers its product to all consumers at the same price

A

single-price monopolist

52
Q

charging different prices to different consumers for the same good

A

price discrimination

53
Q

takes place when a monopolist charges each consumer his or her willingness to pay (the max that a customer is willing to pay)

A

perfect price discrimination

54
Q

involves playing cooperatively at first, then doing whatever the other player did the previous period

A

tit for tat strategy

55
Q

a producer in an industry with only a small number of producers

A

oligopolist

56
Q

when no one firm has a monopoly but producers nonetheless realized that they can affect market prices is an industry characterized by

A

imperfect competition

57
Q

an oligopoly consisting of only two firms

A

duopoly (duopolist)

58
Q

when sellers cooperate to raise their joint profits

A

collusion

59
Q

an agreement among several producers to obey output restrictions in order to increase their joint profits

A

cartel

60
Q

firms that have a tacit understanding not to compete on price often engage in intense ______ using advertising and other means to try to increase their sales

A

nonprice competition

61
Q

when a firm’s decision significantly affects the profits of other firms in the industry

A

interdependence

62
Q

the study of behavior in situations of interdependence

A

game theory

63
Q

the reward received by a player in a game, such as the profit earned by an oligopolist

A

payoff

64
Q

shows how the payoff to each of the participants in a two player game depends on the actions of both

A

payoff matrix

65
Q

a name owned by a particular firm that distinguishes its products from those of other firms

A

brand name

66
Q

price in a perfectly competitive industry is

A

always equal to the marginal revenue of the firm

67
Q

when each player in a game chooses the action that maximizes his or her payoff given the action of other players ignoring the effects of his or her action on the payoffs received by those other players

A

nash equilibrium or noncooperative equilibrium

68
Q

when a firm attempts to influence the future behavior of other firms

A

strategic behavior

69
Q

involves playing cooperatively at first, then doing whatever the other playe rdid the previous period

A

tit for tat strategy

70
Q

when firms limit production and raise prices in a way that raises one anothers’ profits even though they have not made any formal agreement

A

tacit collusion

71
Q

consists of efforts undertaken by the government to prevent oligopolistic industries from becoming or behaving like monopolies

A

antitrust policy

72
Q

occurs when tacit collusion breaks down and prices collapse

A

price war

73
Q

an attempt by a firm to convince buyers that its product is different from the products of other firms in the industry

A

product differentiation

74
Q

one firm sets its price first and other firms then follow

A

price leadership

75
Q

firms that have a tacit understanding not to compete on price often engage in intense ______ using advertising and other means to try to increase their sales

A

nonprice competition

76
Q

a market structure in which there are many competing producers in an industry, each producer sells a differentiated product, and there is free entry into and exit from the industry in the long run

A

monopolistic competition

77
Q

three forms of product differentiation

A

by style or type, by location, by quality

78
Q

in the long run, a monopolistically competitive industry ends up in ________, each firm makes zero profit at its profit-maximizing quantity

A

zero-profit equilibrium

79
Q

firms in a monopolistically competitive industry have _______; they produce less than the output at which average total cost is minimized

A

excess capacity

80
Q

a name owned by a particular firm that distinguishes its products from those of other firms

A

brand name

81
Q

price in a perfectly competitive industry is

A

always equal to the marginal revenue of the firm

82
Q

if a perfectly competitive firm is producing at a quantity where MC>MR then profit

A

can be increased by decreasing production

Econ 2106-Micro (1 decks)

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