Market Structures

Question 1

Oligopoly

Answer 1

a market characterized by a small number of firms who realize they are interdependent in their pricing and output policies

Question 2

Monopoly

Answer 2

power of being the only seller

Question 3

Monopsony

Answer 3

power of being the only buyer; not a price taker

Question 4

Risk

Answer 4

anything that affects the outcome of your choices that can associated with a probability

Question 5

Risk perception

Answer 5

how our experiences (socialization, advertising, etc.) impact how we value risk

Question 6

Specialization

Answer 6

individuals dividing up labor within/across trades

Question 7

Division of labor

Answer 7

increases productivity as individuals are better able to become more dexterous when they focus on one task

Question 8

Absolute advantage

Answer 8

what an individual/nation is absolutely better at

Question 9

Comparative advantage

Answer 9

the ability to produce a good at a lower opportunity cost that the person or country one trades with

Question 10

Unjust outcomes

Answer 10

unfair outcomes due to inequality of the implementation of rules

Question 11

Assumptions

Answer 11

an abstraction that simplifies a scenario

Question 12

Strong assumptions

Answer 12

unrealistic assumptions (weak assumptions are more realistic); to relax assumptions we go from strong to weak assumptions

Question 13

Consumption

Answer 13

-the act of deriving utility (sometimes using things, but only with goods)

Question 14

Constrained Optimization Problem

Answer 14

a situation where one maximizes utility in the face of scarcity

Question 15

Commutative justice

Answer 15

fairness of the rules by which the “market game” is played

Question 16

Commodity money

Answer 16

items that function as money but are also valuable themselves

Question 17

Fiat money

Answer 17

items not valuable as a commodity but function as money because a government states that they are usable for debts