Monopolistic Competition and Oligopoly

For the herfindahl hirschman index how do you find it

S1%^2 + ..........

How do you calculate the four firm concentration ratio

Sales of four largest firms/total sales of industry x 100

The first antitrust laws enacted in the US which made every contract combination or conspiracy in restraint of trade illegal

Sherman act

What's the one thing the two methods of concentration have in common

The higher the number the more concentrated in the industry

What are the characteristics of a monopolistically competitive firm

A relatively large number of producers in the market A differentiated product Sellers with some control over the prices they charge Relatively easy market entry and exit

An antitrust law that made unfair methods of competition and unfair or deceptive acts or practices illegal

Federal trade commission

What happens as markets grow and firms enter

We would expect prices to fall and output to increase and economies efficiency to improved

Producing the goods and services that are most wanted by consumers in such a way that their marginal benefit equals their marginal cost

Allocative efficiency

Laws designed to prevent firms from engaging in behaviors that would lessen competitive in markets

Antitrust laws

Where do the marginal revenue curves lie for monopolistically competitive markets

Below their demand curves

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

Cartel

An antitrust law that prohibits mergers that would substantially lessen competition or create a monopoly as well as some specific business practices such as price fixing and tying contract

Clayton act

A situation in which decision makers coordinate their actions to achieve a desired outcome

Collusion

The value of economic surplus that is forgone when a market is not allowed to adjust its competitive equilibrium

Deadweight loss

A situation in which a practical strategy yields the highest payoff for a decision maker regardless of the other decision makers strategy

Dominant strategy

The level of profit that occurs when total revenue is greater than total cost

Economic profit

A concentration ratio that measures the percentage of sales by the four largest firms in a particular industry

Four firm concentration ratio

The study of the strategic behavior of decision makers

Game theory

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

Herfindahl Hirschman Index

The closer substitutes are for a product the more ________n its demand will be

Horizontal

Is the equilibrium output produced by an oligopolistic firm allocatively or productively efficient

It's neither

How do you determine whether a monopolistically competitive firm is generating a economic profit

Look at whether the average total cost curve intersects the demand curve

The level of profit that occurs when total revenue is less than total cost

Loss

The percentage of total market sales accruing to one specific firm

Market share

A market structure characterized by a relatively large number of sellers producing a differentiated product for which they have some control over the price they charge in a market with relatively easy market entry and exit

Monopoilsitc competition

A market structure characterized by a single seller producing a good or service for which there are no close substitutes, in a market in a relatively blocked entry

Monopoly

A situation in which a change in the strategy followed by one producer will likely affects the sales, profits, and behavior of another producer

Mutual interdependence

An outcome in which decision makers choose their dominant strategy and each has no incentive to independently change his or her strategy

Nash equilibrium

Are cartels good for the consumers

No so most countries have created anti trust laws that make it illegal for firms to covertly or overtly coordinate their activities

The level of profit that occurs when total revenue is equal to total cost also known as zero economic profit

Normal profit

a market structure characterized by a few large producers of either standardized or differentiated products operating in industries with extensive barriers

Oligopolies

Are price makers and behave strategically when making decisions related to future prices and advertising their products

Oligopoly

A table showing the potential outcomes arising from the choices made by decision makers

Payoff matrix

What does monopolistically competitive marketers combine

Perfectly competitive and monopolistic markets

The strategy of distinguishing one firms products from the competing products of other firms

Prodcut differention

The strategy of distinguishing one firms product from the competing products of other firms

Product differentiation

producing output at the lowest possible total cost per unit of production is:

Productive efficiency

Why are the demand curves in monopolistically competitive markets more elastic

There are competitors making close substitutes

What is the rule that monopolistically competitive, perfectly competitive, and monopolistic firms all follow

They profit maximizing rule- produce output at the point in which marginal revenue equals marginal cost