Perfect competition, monopolistic competition, oligopoly, monopoly & supply and demand of labor

following price reductions but not price increases.

A "kinked" demand curve reflects a tendency on the part of an oligopolist to: follow price increases but not price reductions. be unconcerned with rivals' behavior. following price reductions but not price increases. none of these.

market structure

A classification system for the key traits of a market, including the number of firms, the similarity of the products they sell, and the ease of entry into and exit from the market.

demand curve for labor

A curve showing the different quantities of labor employers are willing to hire at different wage rates in a given time period, ceteris paribus. It is equal to the marginal revenue product of labor.

supply curve of labor

A curve showing the different quantities of labor workers are willing to offer employers at different wage rates in a given time period, ceteris paribus.

price maker

A firm that faces a downward-sloping demand curve and therefore it can choose among price and output combinations along the demand curve.

monopolistic competition

A market structure characterized by many small sellers, a differentiated product, and easy market entry.

oligopoly

A market structure in which a few large firms dominate a market, either homogeneous or differentiated product and difficult market entry

shift in labor supply curve leftward.

A union may attempt to obtain stricter certification requirements or longer apprenticeships. These changes would raise workers' wages because they: create unnecessary unemployment. shift in labor supply curve leftward. decrease the marginal product of labor. reduce management's use of featherbedding.

decreasing cost industry

An industry in which the expansion of industry output by the entry of new firms decreases the individual firm's average total cost curve (cost curve shifts downward).

constant cost industry

An industry in which the expansion of industry output by the entry of new firms has no effect on the individual firm's average total cost curve.

increasing cost industry

An industry in which the expansion of industry output by the entry of new firms increases the individual firm's average total cost curve (cost curve shifts upward).

natural monopoly

An industry in which the long-run average cost of production declines throughout the entire market. As a result, a single firm can supply the entire market demand at a lower cost than two or more smaller firms.

barrier to entry

Any obstacle that makes it difficult for a new firm to enter a market.

Marginal revenue product (MRP) will increase.

If a product's price increases, then its: Marginal product (MP) will increase. Marginal product (MP) will decrease. Marginal factor cost (MFC) will increase. Marginal revenue product (MRP) will increase.

restrict output to increase the price even higher.

If marginal cost exceeds marginal revenue, a profit-maximizing monopolist will: restrict output to increase the price even higher. raise price and expand output to increase profit. lower price and expand output to increase profit. attempt to maintain this position because it is consistent with profit maximization.

many other sellers are offering a product that is essentially identical.

In a perfectly competitive market, no single producer can influence the market price because: many other sellers are offering a product that is essentially identical. consumers have more influence over the market price than producers do. government intervention prevents firms from influencing price. producers agree not to change the price.

zero economic profits.

In the long-run, surviving firms in monopolistic competition earn: higher economic profits. zero economic profits. below-normal profits. substantial economic losses.

marginal cost.

Perfectly competitive firms decide how much output to sell by producing output until the price of the good equals: the value of marginal product. marginal cost. marginal product. marginal profit.

marginal factor cost (MFC)

The additional total cost resulting from a one-unit increase in the quantity of a factor.

derived demand

The demand for labor and other factors of production that depends on the consumer demand for the final goods and services the factors produce.

perfectly competitive firm's short run supply curve

The firm's marginal cost curve above the minimum point on its average variable cost curve.

marginal revenue product (MRP)

The increase in a firm's total revenue resulting from hiring an additional unit of labor or other variable resource.

product differentiation

The process of creating real or apparent differences between goods and services

nonprice competition

The situation in which a firm competes using advertising, packaging, product development, better quality, and better service, rather than lower prices.

Natural monopoly.

What is the name of the monopolist having a declining long-run average cost throughout the market? Monopolistic competition. Monopoly by legal barrier. Natural monopoly. Contrived monopoly.

its price is below its average variable cost (AVC).

When a perfectly competitive firm decides to shut down in the short-run, it is more likely that: its marginal cost (MC) is above its average variable cost (AVC). its marginal cost (MC) is above its average total cost (ATC). its price is below its average variable cost (AVC). its fixed cost (FC) exceeds its variable cost (VC).

The firm produces a differentiated product.

Which of the following is characteristic of a monopolistically competitive firm? The firm faces an upward-sloping demand curve. The firm faces an inelastic demand curve. The firm faces a horizontal demand curve. The firm produces a differentiated product.

mutual interdependence

a condition in which an action by one firm may cause a reaction from other firms

kinked demand curve

a demand curve facing an oligopolist that assumes rivals will match a price decrease but ignore a price increase

network good

a good that increases in value to each user as the total number of users increases. as a result a firm can achieve economies of scale (EX. facebook and match.com)

cartel

a group of firms that formally agree to reduce competition by coordinating the price and the output of a product

monopsony

a labor market in which a single firm hires labor

monopoly

a market structure characterized by a single seller, a unique product, and impossible entry into the market

game theory

a model of the strategic moves and countermoves of rivals

price leadership

a pricing strategy in which one firm sets the price and other firms in the industry follow with the same or very similar prices

price taker

a seller that has no control over the price of the product it sells

perfect competition (pure competition)

market structure characterized by a large number of small firms, a homogeneous product, and very east entry into or exit from the market, price taker

collective bargaining

process of negotiation labor contracts between the union and management concerning wages and working conditions

human capital

the accumulation of education, training, experience, and health that enables a worker to enter an occupation and be productive

marginal revenue (MR)

the change in total revenue from the sale of one additional unit of ouput

perfectly competitive industry's long run supply curve

the curve that shows the quantities supplied by the industry at different equilibrium prices after firms complete their entry and exit

price discrimination

the practice of a seller changing different prices for the same product that are not justified by cost differences

arbitrage

the practice of earning a profit by buying a good at a low price an reselling the good at a higher price

perfectly competitive industry's short run supply curve

the supply curve derived from the horizontal summation of the marginal cost curves of all firms in the industry above the minimum point of each firm's average variable cost curve