Econ Ch. 14: Market Structure and Degrees of Market Power
output; revenue; rise; discount; lower; price cut; quantity sold
the _____ effect is when if you sell one more product, your ______ will _______ by the price charged the _______ effect is when you have to _______ your price a little to sell that additional product Formula: ____ _____ x ____ _____
height; firm's demand; marginal revenue; discount effect
the ________ between the ______'__ ______ curve and the _______ _______ curve as a given point is the ______ _________
Monopoly; prices
there's only one seller in the market and you have no direct competitors this means you can raise your ______ without losing customers to your competitors
anti-collusion laws, merger laws, encouraging international trade
3 methods of competition policy (AME)
charger a higher price, sell a smaller quantity, earn larger profits, survive with inefficiently high costs
4 things market power leads business to (CSES)
more competitors; less; market power; independent; product differentiation; more; imperfect competition; bargaining power;
5 key insights into perfect competition Having _____ _______ leads to _______ market power _____ ______ allows you to pursue _______ pricing strategies ________ ________ gives you ________ market power _______ ________ among buyers gives them _______ _________ best choice depends on other business' actions
to figure out what quantity to sell, keep selling until marginal revenue equals marginal cost
Rational Rule for Sellers
perfect competition, monopolistic competition, oligopoly, then monopoly
Spectrum of market power from least to most (4)
competition policy; minimize the harmful ways
The 2 policy approaches governments can use to regulate markets consists of the _______ ________ and policies that _______ ___ _______ _______ that businesses might exploit their market power
marginal revenue; demand; declines faster
______ _______ lies below the ______ curve and it _______ _______
perfect competition; identical good; buyers and sellers
______ ________ describes a market in which all firms sell an ______ _______ and there are many _____ ___ ________
firm's demand; individual business; market power; flat; no; steeper; more
______'_ _______ curve illustrated how the quantity buyers demand from an ____ _______ or firm varies as the price charged changes your _____ _____ determines the shape of this if the demand curve is ______ you have _____ market power while the ______ the demand curve the ______ market power you have
anti-collusion; merger
______-_____ laws prevent businesses from agreeing not to compete while ________ laws prevent competing business from combining to consolidate power
market power; perfectly competitive market
_______ ______ is the ability to raise your prices without losing many sales to competing businesses; you don't have this in a _______ ______ ______
market power; market failure; smaller quantity; underproduction
_______ _______ creates a _______ _____ because it leads suppliers to supply a _______ ______ than is in society's best interest (__________)
natural monopolies
________ _______ often lead to government intervention these are monopolies that when in a market, it is cheapest for a single business to service the market (Ex: water, gas, electricity, etc...)
marginal revenue; output effect minus the discount effect
________ _________ is the addition to the total revenue you get from selling one more product this reflects the .........
monopolistic competition; differentiated products
_________ ________ is when many competitors sell ______ _______ Ex: jeans
oligopoly; decisions
a market dominated by a handful of large sellers you only have a few competitors but their _________ greatly influence you
price ceilings
a type of policies that minimize the harmful ways that business might exploit their market power
marginal revenue; marginal cost; quantity; firm's demand; price
you look to where _____ ______ and _____ ______ cross to figure out what _______ to produce then look at the ____'_ _______ curve to see what ______ to charge