econ
Pfizer being the only firm that is legally allowed to produce and sell Liptor, a best selling cholesterol drug debeers owning nearly all of the worlds diamond mines boeing already serves a large fraction of the jumbo jet market and is able to produce at a lower average cost than potential competitors
barrier to entry example
the fast food industry
example of monopolistic competition
not assumed in perfect competition
a small number of producers significant barriers to entry firms selling a similar but Dif good
variable costs; diminishing marg returns
a firms...... are costs that increase as quantity produced increases. these costs often show......illustrated by the increasingly steeper slope of the total cost curve
fixed costs;do not change
a firms.......are costs that are incurred even if there is no output. in the short run, these costs.......as production costs
utility
a measure of the satisfaction people receive from their choices
a single firm producing a product with no close substitutes and control over the market price
a monopoly is characterized by
zero;exit;enter
for firms in perfectly competitive markets, long run economic profits are...because firms will....this market if profits are less than that and.....this market if profits are greater than that
true
if you eat a slice of pizza that gives you food poisoning your utility will decrease
municipal power light, the local suppliers of electricity
most likely to be a natural monopoly
oligopoly
made up of a small number of firms, these firms may be differentiate their products depending on what they produce. some products such as steel or water may be more difficult to differentiate than other products, such as phones or cars
monopoly `
market structure in which there is only one producer of a single good, as a result there is not product differentiation since there is only a single good
ex of variable costs
metal for manufacturing wood for manufacturing postage and packaging
shifts rightward
minors are now permitted to operate heavy machinery such as bulldozers
shift leftward in labor supply
minors are required to take a year long training course to be able to work in industries deemed hazardous
shift leftward in labor supply
minors maximum amount of work hours per week is cut in half
does not shift supply
minors now must be paid 10% about minimum wage
shifts leftward in labor supply
minors who graduate with a 3.5 gpa or above are given a 20,000 check from the department of labor
true
models of consumer behavior assume that if a person earns $100 a week, he will choose the combination of goods services and savings that cost 100 and maximize his utility
perfect price discrimination
occurs when firms not only charge different consumers different prices, but also charge each person the maximum that they would be willing to pay for a good
the existence of at least one fixed input
one thing that distinguishes the short run and the long run is..
fixed costs
payments which must be made regardless of the level of production
occurs when firms charge different consumers different prices for the same good
price discrimination
Assumed in perfect competition
price taking behavior
monopolistic competition
similar to perfect competition in the sense that firms in monopolistic competition have essentially no ability to affect the price, however unlike perfect competition these firms are able to differentiate their products. fast food is ofter considered to be a market with monopolistic competition
duopoly
suppose that in the small town, prairie, there are only two cable providers. what type of market structure does the local cable market have
marginal utility
the extra satisfaction a person obtains from consuming one more unit of a good or service
marginal utility
the extra satisfaction experienced by one additional unit of consumption
during which all inputs can be varied
the long run is best defined as a time period...
an efficient quantity is produced firms have no market power
characteristic of perfect competition
average variable cost
VC/Q the sum of all costs that changes divided by the number of units produced
ex of fixed costs
lease on a building interest on debt industrial equipment costs salaries of top management and key personnel regulatory compliance costs
marginal cost
change in total cost/change in quantity the amount by which total costs increases when an additional unit is produced change in total cost divided by change in output
price is higher than in the other market structures firms can earn positive economic profit in the long run there are significant barriers to entry
characteristic of a monopoly
variable costs
costs of production that change with the quantity produced
the quantity where marginal revenue equals marginal cost the quantity where price equals marginal cost
in the short run, perfectly competitive firms will maximize their profit by producing ...
perfect competition
is one with many firms that all produce an undifferentiated good. some examples of this type of market may be wheat, corn, and other agricultural products
law of diminishing marginal utility
it is possible for marginal utility to increase but this won't occur at all levels of consumption. at some point marginal utility is thought to decline.
Utility
the satisfaction experienced from consuming a good or service
average total cost
total cost/quantity total cost divided by quantity of output
variable input
upper management salaries computers hourly labor shipping beads chairs 2 year lease on office and retail space
true
utility is the enjoyment a person gains from consumption
a monopoly that results when one firm is able to produce at a lower cost than multiple firms, giving large firms with higher levels of output an advantage over smaller competitors
what is a natural monopoly
negative marginal utility
when the consumption of an additional unit of a good or service makes a person worse off
diminishing marginal utility
when the consumption of an additional unit of a good or service provides the person with a smaller increase in satisfaction than previous units
