Econ Midterm2 review

Econ Midterm2 review - interdependence. Often ability to...

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Econ Midterm #2 Review Dominant Strategy : Doesn’t matter what competitor chooses, you are going to choose best option. (game theory) Perfect Competition: The market structure characterized by large numbers of small firms producing and selling a homogenous product in a competitive market with easy entry and exit. No ability to influence price No product differentiation No barrier to enter market No long run economic profit Produce at minimum ATC Efficient Cannot discriminate Monopoly : A market structure in which there is a single seller of a commodity or service that has no close substitutes Always ability to influence price Only one product Prohibitive barrier to enter market Massive profit Does not produce at minimum ATC Innefficient Deadweight loss Oligopoly: A market structure in which a few large firms dominate the industry. Some of these industries produce an undifferentiated product, others a differentiated product. In either case, a special feature of oligopoly is that the firms recognize their
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Unformatted text preview: interdependence. Often ability to influence price Few number of sellers None or some product differentiation Substantial barrier to enter market Can earn long run profit Does not produce at minimum ATC Monopolistic Competition : A market structure in which each firm is relatively small, but each has a monopoly on its particular version of the product in question. Competition in such a framework includes advertising, easy entry product differentiation, limited price control, and other forms of non-price competition. Some ability to influence price Many sellers Some product differentiation Few barriers to enter market Cannot earn long-run economic profit Does not produce at minimum ATC Labor market graph will curve backwards once price reaches certain level MB = Marginal benefit = Marginal rev. product= MRP = change in Total rev/change total number of laborers Derived Demand-how much firm sells in market, more company will hire...
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This note was uploaded on 04/28/2008 for the course ECON 101 taught by Professor Minkler during the Fall '07 term at UConn.

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Econ Midterm2 review - interdependence. Often ability to...

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