Market Structures Flashcards
Oligopoly
a market characterized by a small number of firms who realize they are interdependent in their pricing and output policies
Monopoly
power of being the only seller
Monopsony
power of being the only buyer; not a price taker
Risk
anything that affects the outcome of your choices that can associated with a probability
Risk perception
how our experiences (socialization, advertising, etc.) impact how we value risk
Specialization
individuals dividing up labor within/across trades
Division of labor
increases productivity as individuals are better able to become more dexterous when they focus on one task
Absolute advantage
what an individual/nation is absolutely better at
Comparative advantage
the ability to produce a good at a lower opportunity cost that the person or country one trades with
Unjust outcomes
unfair outcomes due to inequality of the implementation of rules
Assumptions
an abstraction that simplifies a scenario
Strong assumptions
unrealistic assumptions (weak assumptions are more realistic); to relax assumptions we go from strong to weak assumptions
Consumption
-the act of deriving utility (sometimes using things, but only with goods)
Constrained Optimization Problem
a situation where one maximizes utility in the face of scarcity
Commutative justice
fairness of the rules by which the “market game” is played
Commodity money
items that function as money but are also valuable themselves
Fiat money
items not valuable as a commodity but function as money because a government states that they are usable for debts
