Lesson 11&12

Question 1

monopoly

Answer 1

a form of market structure in which there is only one seller of a good or service

Question 2

perfect/first-degree price discrimination

Answer 2

a situation in a market whereby a monopoly firm is able to charge each consumer a different price

Question 3

arbitrage

Answer 3

a process by which prices in two market segments will be equalised as a result of purchase and resale by market participants

Question 4

dynamic efficiency

Answer 4

lowering the position of the AC curve over time by improving production processes

Question 5

X-inefficiency

Answer 5

actual average cost is above the AC curve due to lack of competitive pressure

Question 6

second-degree price discrimination

Answer 6

lower prices are charged when larger quantities are bought

Question 7

third-degree price discrimination

Answer 7

a firm charges different prices for the same product to different market segments