Vocabulary: Unit Five Flashcards

1
Q

Price taker

A

A firm that can sell as much as it wants at the market price without affecting the market price, but can’t sell anything at a price above the market price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Marginal revenue

A

The amount of revenue received for selling one more unit of product

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Productive efficiency

A

When a firm produces at the lowest per unit cost possible

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Lowest per unit cost

A

Output level where average total cost is at its minimum

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Allocatively efficient

A

When firm’s allocate resources so the number and type of goods or services they produce are the same as what consumers value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Monopoly

A

An industry with only one firm producing a good or service with no close substitutes with barriers to entry that prevent new firm’s from entering the industry, and typically with positive economic profits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Barriers to entry

A

Things that prevent new firm’s from entering an industry

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Market power

A

Price-setting ability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Profit maximizing level of output

A

Where marginal cost equals marginal revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Profit maximizing price

A

The price consumers are willing to pay for the profit-maximizing level of output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Monopolist’s profits

A

Total revenue minus total costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Deadweight loss

A

The lost opportunity to produce output whose benefit to consumers is greater than the cost of production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Price discrimination

A

Selling the same product to different consumers at different prices based on demand difference

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Arbitrage

A

Lower-price consumers reselling to higher price consumers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Natural monopoly

A

A firm that experiences decreasing average total cost over the whole range of production demanded in the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Fair return

A

Average cost pricing; the monopoly is able to charge a price equal to average total cost

17
Q

Monopolistically competitive industry

A

Imperfect competition because firms have some control over price of output; many firms, differentiated products, price-searching, free entry and exit, non price competition

18
Q

Non-price competition

A

Advertising; competition unrelated to price

19
Q

Oligopoly

A

Few competitions, independent firm’s, barriers to entry

20
Q

Collusion

A

Firm’s jointly determine price or output to increase profits

21
Q

Cartel

A

Formal collusion agreement

22
Q

Tacit collusion

A

Unspoken or unwritten collusion agreements

23
Q

Game theory

A

Tracks strategic moves by a firm and countermoves by rival firms; decisions regarding pricing and output levels depend on rival’s choices

24
Q

Price leadership

A

A dominant firm sets a price and other firms in the industry take that price and sell whatever quantity they can

25
Cost-plus pricing
Output price is determined by adding a specific percentage markup to average variable cost
26
Kinked demand curve
Firm's think rivals will follow price cuts but not price raises
27
Horizontal merger
Combines two firms that produce similar products
28
Vertical merger
Combines two firms that produce products used in different stages of the production process of a good
29
Conglomerate merger
Combines two firms that produce products in two different industries
30
Market concentration
A measure of how dominant the four largest firms are in an industry
31
Antitrust legislation
Aimed at businesses trying to restrain trade or significantly reduce competition
32
Sherman Act of 1890
Made it illegal to monopolize or attempt to monopolize an industry
33
Clayton Act of 1914
Gave the government more enforcement power against anticompetitive business procedures
34
Federal Trade Commission Act of 1914
Has the power to investigate and hold hearings regarding unfair business practice
35
Cellar-Kefauver Act of 1950
Banned vertical and conglomerate mergers that would unreasonable restrain trade
36
Hart-Scott-Rodino Act of 1980
Allowed for businesses organized either as proprietorships or partnerships to be reviewed for monopolistic business practices