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