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