Monopolistically and Oligopolistic

monopolisitc competition and perfect competition have one main characteristic in common: relatively ______ market entry and exit

easy

The characteristics of an oligopoly competitive market are:

- Producers who behave strategically when making decisions related to the features, prices, and advertising of their products. - A few large producers. - Operation in industries with extensive entry barriers. - Producers who are price makers. - Wither standardized or differentiated products.

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

the top four firms in the retail surfboard industry maintain total sales of $6 million per year. if the entire retail surfboard industry sells $12 million worth of output, then the four-firm concentration ratio is _____%

50% (6/12)*100= 50%

Consider the monopolistically competitive firm; the firm begins in a long run equilibrium, generating a normal profit. In the long run, other firms will ____ this market

enter

normal profit

The level of profit that occurs when total revenue is equal to total cost. This level indicates that a firm is doing just as well as it would have if it had chosen to use its resources to produce a different product or compete in a different industry. Normal profit is also known as zero economic profit.

The herfindahl-hirschman index (HHI) refers to

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

collusion

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

A monopoly is a market structure characterized by:

a) one seller, b) a unique product with no substitutes, c) large barriers to entry.

oligopolistic firms often studied using the tools fo

game theory

Laws designed to prevent firms from engaging in behaviors that would lessen competition in a market are called

antitrust laws

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

cartel

Profit maximization implies that monopolistically

competitive firms should expand production up to the point where the marginal revenue equals the marginal cost

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

deadweight costs

Through advertising and branding, monopolistically competitive firms increase the demand for their products and make those demands relatively more______, allowing them to charge higher______ and generate_____economic profits

inelastic, price, more

four-firm concentration ratio (CR4)

is a percentage between 0 and 100, and industries with ratios at or above 40% are considered oligopolies and 100% represents a pure monopoly

the percentage of total market sales accruing to one specific firm is called

market share

The presence fo many monopolistically competitive firms in an industry makes the firm unable to produce enough output to reach the ____ average total cost, so the firms have______ capacity to produce

minimum, excess

Because______ competitive firms face a downward-sloping demand curve, their marginal revenue curve lies____ the demand curve

monopolistically below

Because_______ competitive firms have some control over prices, the firm will charge consumers the price they are willing and able to pay for the available output, which is found by projecting the profit-maximizing output level onto the ____ curve

monopolistically, demand

games can have:

more than one nash equilibrium

In a monopolistically competitive market, competitors make close substitutes, so demand curves are relatively____ elastic than those faced by monopolies and _____ elastic than those faced by perfectly competitive firms

more, less

A manufacturer's profits are determined not only by its decisions but also by the decisions of the other firms in the industry. This why we say that oligopolistic firms are:

mutually interdependent

Consider the monopolistically competitive firm; the firm begins in a long run equilibrium, generating a normal profit. The long-run equilibrium is

neither allocatively nor productively efficient

In an oligopoly

producers may or may not earn economic profits

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

productive efficiency

In monopolistically competitive markets, which of the following allow consumers to be more responsive to price change

the availability of close substitutes

Oligopolistic firms tend to price above their marginal and average total cost of production and are not subject to the intense competitive pressures. As a result

the equilibrium output produced by an oligopolist firm is neither allocatively nor productively efficient

Economic profit

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

The four-firm concentration ratio is

the percentage of total industry sales accounted for by the top four firms in the industry

Consider the monopolistically competitive firm; the firm begins in a long run equilibrium, generating a normal profit. Once the demand for this firms product increases, the new profit-maximizing level fo output and price for the firm

the profit maximizing level of output occurs where the new marginal revenue curve intersect teh marginal cost curve. Because the demand and the marginal revenue have increased, the new profit maximizing output level will be higher than the original

Which fo the following is not an entry barrier in oligopolistic markets

upward-sloping long run marginal cost curve

A clear benefit to monopolistic competition for consumers is product

variety

The number of other restaurants in the area increase Demand will: Elasticity of Demand will

decrease increase

Consider the monopolistically competitive firm; the firm begins in a long run equilibrium, generating a normal profit. After the entry of new firms, teh new demand and marginal revenue curves for this firm will be

existing firms demand curve will return to the position where normal profits are generated (zero economic profit)

Steve institutes a frequent-diner program whereby a customer who visits five times receives a sixth meal free Demand will: Elasticity of Demand will

increase decrease

The number of consumers in the area increases Demand will: Elasticity of Demand will

increase no change (increase in number of consumers does not have an impact on elasticity of demand)

Consider the monopolistically competitive firm; the firm begins in a long run equilibrium, generating a normal profit. Suppose there is a large increase in demand in the overall market, resilient in an increase in the demand for the this firms product. Theterm-10 demand and the marginal revenue curves will

shift to the right

Assume most of the firms in the market experience the same increase in demand. The change will result in the firms'

short run economic profits

A number of entry barriers are present in oligopolistic markets including:

significant costs of capital, control of the resources needed to produce output, patents, economies of scale that may allow only a small number of firms to operate in a market, pricing stategies