Econ Ch. 14: Market Structure and Degrees of Market Power

output; revenue; rise; discount; lower; price cut; quantity sold

the _____ effect is when if you sell one more product, your ______ will _______ by the price charged the _______ effect is when you have to _______ your price a little to sell that additional product Formula: ____ _____ x ____ _____

height; firm's demand; marginal revenue; discount effect

the ________ between the ______'__ ______ curve and the _______ _______ curve as a given point is the ______ _________

Monopoly; prices

there's only one seller in the market and you have no direct competitors this means you can raise your ______ without losing customers to your competitors

anti-collusion laws, merger laws, encouraging international trade

3 methods of competition policy (AME)

charger a higher price, sell a smaller quantity, earn larger profits, survive with inefficiently high costs

4 things market power leads business to (CSES)

more competitors; less; market power; independent; product differentiation; more; imperfect competition; bargaining power;

5 key insights into perfect competition Having _____ _______ leads to _______ market power _____ ______ allows you to pursue _______ pricing strategies ________ ________ gives you ________ market power _______ ________ among buyers gives them _______ _________ best choice depends on other business' actions

to figure out what quantity to sell, keep selling until marginal revenue equals marginal cost

Rational Rule for Sellers

perfect competition, monopolistic competition, oligopoly, then monopoly

Spectrum of market power from least to most (4)

competition policy; minimize the harmful ways

The 2 policy approaches governments can use to regulate markets consists of the _______ ________ and policies that _______ ___ _______ _______ that businesses might exploit their market power

marginal revenue; demand; declines faster

______ _______ lies below the ______ curve and it _______ _______

perfect competition; identical good; buyers and sellers

______ ________ describes a market in which all firms sell an ______ _______ and there are many _____ ___ ________

firm's demand; individual business; market power; flat; no; steeper; more

______'_ _______ curve illustrated how the quantity buyers demand from an ____ _______ or firm varies as the price charged changes your _____ _____ determines the shape of this if the demand curve is ______ you have _____ market power while the ______ the demand curve the ______ market power you have

anti-collusion; merger

______-_____ laws prevent businesses from agreeing not to compete while ________ laws prevent competing business from combining to consolidate power

market power; perfectly competitive market

_______ ______ is the ability to raise your prices without losing many sales to competing businesses; you don't have this in a _______ ______ ______

market power; market failure; smaller quantity; underproduction

_______ _______ creates a _______ _____ because it leads suppliers to supply a _______ ______ than is in society's best interest (__________)

natural monopolies

________ _______ often lead to government intervention these are monopolies that when in a market, it is cheapest for a single business to service the market (Ex: water, gas, electricity, etc...)

marginal revenue; output effect minus the discount effect

________ _________ is the addition to the total revenue you get from selling one more product this reflects the .........

monopolistic competition; differentiated products

_________ ________ is when many competitors sell ______ _______ Ex: jeans

oligopoly; decisions

a market dominated by a handful of large sellers you only have a few competitors but their _________ greatly influence you

price ceilings

a type of policies that minimize the harmful ways that business might exploit their market power

marginal revenue; marginal cost; quantity; firm's demand; price

you look to where _____ ______ and _____ ______ cross to figure out what _______ to produce then look at the ____'_ _______ curve to see what ______ to charge