Econ 2

Classified in Economy

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not an assumption of p comp?each firm produces and sells a differenciated product.is it c to say in perfectly comp market structure firm have 0 influence ovr price they charge? yes bc too many firms for one to affect price.price taker: does not control price of product it sells.Perfectly comp are takers bc?barriers to exit force firms to sell @ market price. Demand curve for perf comp firm?horizontal.Demand curve for perf comp market?downward sloping.perf comp firm will produce at output level at which?mc=mr.industry of 40 firms,none has >3% of total market for a diff. Product?perf comp. For a perfectly comp firm? mr curve and d curve are same.A perf comp firm will continue to produce if? mc>mc.If p>atc a perf comp firm should?increase to p=atc.Perf comp firm will?produce in sr if p<avc.prices least likely to be flexible or rigid in?where product demand is inelastic.in sr a perf comp firm seeks to max profits will produce?at any point where the tr and tc curves intersect.A firm reaches a break-even point where?tr=tvc.Which does not characterize LR competitive equilibrium?firms producing the quantity of output at which p>mc.if firm is earning 0 profits, this means that they must be producing at an output level at which?p=atc.When perf competitive firm produces the quantity at which mr=mc if naturally?earns a profit.Why must profits be 0 in lr competitive equilibrium?because if profits not 0, mc rises.Valid generalization b/w p and c for perf comp seller in SR? pxq must be = or > tvc for some level of output or the firm will close in sr. as firms exit an industry, supply c shifts? Left,rise,zero.RAE occurs when?firm produces the quantity of output at which p=mc.Best interest in perf comp firm to ads? no.Assumptions of perf comp assures that econ proft will be 0 in LR?easy entry and exit.objective of perf comp firm?max econ profit. price charged by perf comp firm determined by?market demand and supply. price taker demand curve?perf elastic.perf comp firm will shut down in SR if?p<min avc.public franchise?right granted by a firm to gov that prevents other firms from producing the same product or service.best ex of a monopoly?local power utility.public franchises,patents, and gov licenses are ex of?legal barriers to entry.not a legal barrier to entry?economies of scale.Constant cost industry? demand curve and unit price and quantity sold seldom change.which is true?monopolist can charge whatev p it wants.in equilibrium which of the conditions are common to monopoly and perf comp? mr=mc.to max profits a monopolist will charge a p which?>mc.Monopolist earning profits?p>mc.Monopolistic market structure p<atc monopolist is?incurring at econ loss.sells each unit for highest price consumer would pay?perfect price disc.price disc occurs when?none.Charges lower prices to seniors?3rd degree p discrimination.arbitrage?buying a good in 1 market and selling it in another 4 profit.X-inefficiency?fact that monopolists dont have to produce @ lowest possible costs to survive.demand curve 4 monopolist?perfectly inelastic.At the quantity whee a monopoly maximizes profit,price always?>mc.Monopoly firm may earn positive econ profit in lr?both a and c.monopolistically comp industry?each firm in industry produces a slightly diff product.Best ex on monopolistic comp?service stations.monopolistic competitor?downwardsloping d curve.D curve fac?flatter,less.Monopolistic competitors earn pos econ profits in lr?none.product differentiation?nonprice competition.which is false?many substitutes in a monopolistically comp industry.monopolistic competitor produces output?mr=mc.excess capacity theorem?produce at output level of smaller than the one that would minimize unit cost.Assumption of oligopoly?none of the above.Mutual interdependence?firms must depend on another to maintain consumer interest.% of sales accounted for by x-num of firms in industry?concentrat ratio.interdependence?oligopoly. kinked curve theory?portion below highly elastic.behavioral assumption kinked demand?if a firm lowers price, other firms will, if raises, they wont.Kinked curve theory?Relatively in/elastic.prisoner's dilemma?individ rational behavior leads to collectively inefficient outcome.assumptions that monopolistic competition has in common with perf comp include?easy entry and exit.Monopolistically competitive firm maxes profits by producing where?mr=mc.concentration ratios used?extent/degree of oligopoly.behavioral assumption kinked demand of oligopoly?firms follow price decreases but not increases.In prisoners dilemma each would be best?neither confesses.does best for indiv?both confess worst outcome.a kink in demand curve?jump or gap in mr curve.profit-maximizes monopolistic competitor produces where?p=mcandmr.Monopolistic competitve firms may earn pos econ profits in LR because?product differentiation.suppose losses cause industry x to contract the prices of relevant inputs decline? x-inefficiency.Kinked demand curve theory?follow;ignore.assumptions not shared by the models on monopolistic comp and perf?differentiated products.Applies to both perf comp and monopolistic comp?all.monopolistic competitor in lr produces?p=atc.sherman act?prevent monopolization/conspiracy.antitrust law?control monopoly power and preserv comp.exclusive dealing?selling to retailer seller not carry rival products.price discrim illegal?clayton act.decrease fail rate of sml bus and protect form comp of large and growing chains?ftc.Tying contracts?sale of one product is dependent on purchase of another.Unfair methods of competition?ftc.Deal with false/deceptive acts?wheeler.pending mergers be reported?hart-scott.Robinson.large retailers selling prices below those charged by small?  rob-pat cellar?prevent phys assets aquisition.herfindahl?avg market share of any firm.capture hypothesis?regulatory agency.Clayton act?price discrim,ex deal,etc.cellar?banned anticompetitive mergers. 

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