econ final

4 categories of resources are used to produce goods and services

-capital -land -entrepreneurial ability -labor

when deciding how many workers to employ

a firm tends to emphasize marginal revenue product

marginal resource cost

additional cost incurred as a result of utilizing one more unit of a variable resource is..

marginal product

additional output produced as a result of utilizing one more unit of a variable resource

Demand for a monopolistically competitive firm is more elastic than demand faced by monopoly becuase

availability of close substitutes

in a monopolistically competitive market...

consumers can find exactly what they are looking for based on their preferences and budgets

a firm will purchase a resource if the benefit associated with the purchase is...

greater than or equal to its cost

a monopolistically competitive firm should produce output until

marginal revenue = marginal cost

demand & average revenue & marginal revenue curves for a perfectly competitive firm are the same horizontal line at:

market price

elasticity for demand of products

more substitutes there are for a product

monopoly

no substitutes and entering market would be difficult for anyone

entry barriers are present in an

oligopolistic markets

four-firm concentration ratio

percent of sales by 4 largest firms in particular industry

the market share

percent of total market sales accruing to one specific firm

total revenue=

price times quantity

perfectly competitive model is most efficient type of market & characterized by both

productive & allocative efficiency

marginal revenue product=

change in total revenue/ change in resource quantity

perfect competition

market structure characterized by a large number of buyers/sellers. sellers produce a homogeneous product

monopolistic competition

market structure characterized by relatively large number of sellers producing a diff product that they have control over the price they charge. In a market w relatively easy market entry & exit known as

when an industry's CR4 exceeds 40%, it's considered

oligopoly

monopoly

perfect price discrimination generates the best outcome for what?

monopoly

perfect price discrimination generates the best outcome for which of following market structures

block pricing

second degree price discrimination is aka

market share

% of total market sales accruing to one specific firm

market share refers to:

% of total market sales accruing to one specific firm

profit=

(P-ATC) x Q

for a perfectly competitive firm, the market price is equal

-average revenue -marginal revenue -demand

what are the choices firms have when dealing with higher resource costs?

-deduct more from employees paychecks to pay higher costs -lower wages to compensate for additional expense -pay additional cost, which shifts marginal resource cost curve up

characteristics of oligopoly competitive market:

-few large products -producers who behave strategically when making decisions related to features, prices, advertising -producers who are price makers -operation in industries with extensive barriers -standard or different products

pure monopoly extracts all surplus from consumers, yielding higher profits than any other pricing method when it employs the following?

-first degree price discrimination -personal pricing -perfect price discrimination

4 characteristics of perfectly competitive market

-large number of buyers/ sellers -easy entry/ exit -standardized product -producers who are price takers

when there is productive efficiency

-output is produced using the fewest resources possible to produce a good or a service -output is produced at the lowest possible total cost per unit of production

2 most common numerical indicators of market concentration

-the herfindahl-hirscham index -four-firm concentration ratio

in a perfectly competitive market , homogeneity means that firms must charge the market price for the goods/ services they produce bc

-there are hundreds of other perfectly good substitutes -the market is competitive

by charging consumers the highest price they are willing & able to pay the pure monopoly:

-yields higher profits than any other pricing method available to the firm -extracts all surplus from consumers

in the Herfindahl-Hirschman index when #s are expressed 0 to 10,000, what number is a pure monopoly?

10,000

first degree price discrimination

Practice of charging each customer the price they are willing & able to pay for a good/service

in the circular flow model, what interacts in the resource market and the product market?

firms & households

marginal product times the price

firms operating in perfectly competitive markets, if the price of a product is constant, the marginal revenue is equal to

cartel

a group competing companies that aim to maximize joint profits by coordinating their policies to fix prices, manipulate output, or restrict competition

what is collusion?

a situation when decision makers coordinate their actions to achieve a desired outcome

potential reason diseconomies of scale to exist is that a firm

can't perfectly replicate its production when it expands

monopolistically competitive markets

combine characteristics of competitive markets & pure monopolies

Herfindahl-Hirschman Index

concentration index that measures the sum of the squared percentage of sales from all firms in a particular industry

diseconomies of scale

condition when the long run average total cost of production increases as production increases

perfectly competitive market involves firms that produce identical products. This guarantees:

consumers receive lowest price

in a monopolistic competitive market

consumers usually find what they are looking for based on preferences and budgets

an employees wage is tied to productivity... the higher the marginal revenue product should result in...

higher wage for that employee

if rate is constant, marginal resource cost associated with hiring 1 additional worker is...

horizontal line at wage

result of output produced when D=MC which is allocatively efficient

in a pure monopoly the firm is willing to sell to anyone who is willing/able to pay the marginal cost of production

price discrimination

practice of selling the same good/ service to diff consumers at diff prices is called

monopolistic competition is a market characterized by:

relatively large number of sellers producing a differentiated product, they have some control of the price in market w relatively easy market entry & exit

marginal revenue product

represents additional revenue generated from using an additional unit of a resource

game theory

study of behavior of decision makers

in a monopolistically competitive markets what allows consumers to be more responsive to price changes?

the availability of close substitutes

marginal revenue

the extra revenue associated with the production and sale of one additional unit of output

the more productive an employee is...

the higher that employee's marginal revenue product will be

bc monopolistic competitive firms face downward sloping demand curve..

the marginal revenue curve lies below the demand curve

the demand curve become the marginal revenue curve when:

when a pure monopoly practices first degree price discrimination