econ final
industrial characteristics
1. # of firms 2. type of product (homogeneous or differentiated) 3. level of info and tech 4. barriers to entry (no vs yes)
oligopoly
1. few dominant firms 2. standardized or differentiated 3. level of info/tech is different 4. no barriers to entry if you enter as a small firm, yes barriers to entry if you enter as a dominant firm
monopoly maximize process
1. find output (MR=MC) 2. find profit (revenues - costs)
resources
1. land 2. capital 3. labor 4. entrepenuership 5. time 6. money
3 types of barriers to entry
1. legal barriers (patents, trademarks, copyrights) 2. sole owner of a key resource 3. natural monopoly
ranking of degree of most market power
1. monopoly 2. oligopoly 3. monopolistic competition 4. perfect competition
ranking of most competitive
1. perfect competition 2. monopolistic competition 3. oligopoly 4. monopoly
land uses
1. residential 2. commercial/industrial 3. agriculture/mining 4. undeveloped
supply of worker
1. skill required 2. education required 3. risk factors 4. worker organizations
monopolistic competition
1.many firms 2.differentiated products 3.brand loyalty 4.no barriers to entry
perfect comp/most competitive industry
1.many firms 2.homogeneous product 3.same level of info/tech 4.no barriers to entry
monopoly
1.one firm 2.standardized or differentiated 3.same/diff tech 4.barriers to entry
the change in total revenue associated with one additional unit of input measures
MRP
a competitive firm is
a price taker
implications
all firms are charging the same price in the long run, economic profits will be 0
the demand for labor and other factors of production typically decline in a recession because those factors...
are derived from the demand for final output, which also declines in a recession
the market supply curve for labor curve is upward-sloping because
as the wage rises, most workers are willing to work more hours
for an oligopoly, a few firms cannot dominate in the long run unless
barriers to entry exist
why do monopolistic competitive firms have a "monopoly" element to them?
brand loyalty gives them a captive audience
MR =
change in total revenue divided by change in quantity
marginal revenue =
change in total revenue divided by change in quantity
in the short run, fixed costs are
constant
if consumers decide to buy fewer strawberries, then the
demand for strawberry pickers will fall
the demand for labor is downward-sloping because of
diminishing returns to labor
a competitive market has a
downward-sloping demand curve for the market
the extra output produced by an additional worker diminishes as additional workers are hired because
each worker has an increasingly smaller amount of other factors with which to work
if long-run economic losses are being experienced in a competitive market...
equilibrium price will rise as firms exit
in the long run, an oligopolist is most likely to
experience economic profit because of barriers to entry
in a monopolistically competitive market with negative profits
firms will exit until economic profits are zero
to find average cost
go to marginal cost line
students who major in computer science are paid a lot more when they graduate than those who major in philosophy because
information technology is a growth industry
if the entire output of a market is produced by a single seller, the firm
is a monopoly
when a firm minimizes its losses in the short run...
it continues to produce only if its losses are less than their fixed costs
the willingness to work a certain amount of time at a given wage rate is known as
labor supply
if new firms enter a monopolistically competitive market, the demand curves for existing firms will shift to the
left and become more price-elastic
if a monopolistically competitive firm raises its price it will
lose non-loyal customers
if a monopolistically competitive firm raises its price, it will
lose non-loyal customers
in the competitive dimension of monopolistic competition, what pushes economic profits towards 0?
low barriers
in order to sell any additional units, what must a monopolist do?
lower its price on all of its units
number of firms =
market output / average firms output
_________ has a low cross-price elasticity
monopolistic competition
least competitive industries
monopoly and oligopoly
most difficult for new firms to enter a
oligopolistic market
market structure that is characterized by a few interdependent firms
oligopoly
_________ has a high cross-price elasticity
perfect competition
most competitive industries
perfect competition and monopolistic competition
exit or "going out of business"
permanent
what determines how many workers the firm wants?
price and productivity
a perfectly competitive firm will maximize profits by choosing an output level where
price equals marginal cost
what most characterizes monopolistic competition?
product differentiation
profit-maximizing equation
q(p-AC)
if there is an increase in the number of workers who want to work as accountants, there will be a...
rightward shift of the labor supply curve
when new firms enter
supply shifts right and profit does down
shut down
temporary
the market supply of labor is
the amount of labor all workers supply at different wage rates
the extra output produced by a unit of labor is equal to
the change in total output divided by the change in quantity of labor
the kinked demand curve explains
the consequences of the interdependent behavior of oligopolists and that prices may not change even in the fact of cost increases
the demand for labor and other factors of production derive from
the demand for final output and is why they typically decline in a recession
product differentiation is
the features that make one product appear different from competing products in the same market
the major difference between monopoly and monopolistic competition is
the number of firms in the market
the major differences between monopoly and monopolistic competition is
the number of firms in the market
when firms are interdependent
the profit of one firm depends on how its rivals respond to its strategic decisions
competitive firms cannot individually affect market price because
their individual production is insignificant relative to the production of the industry
perfect competition is a situation in which
there are many firms and no seller has pricing power
if wage rate increases
there will be a movement up the labor supply curve to the right
why do oligopolists have a kink in their demand?
they raise then lower price
mutual interdependence
what one firm does will be felt by other firms
when should the additional unit of labor be employed?
when it costs less than it is worth
in a monopoly, what makes the market price of the product fall?
when the monopoly suddenly loses its ability to deny potential competitors entry into market; loses pricing power