Exam 3 Study Guide

Exam 3 Study Guide - Exam 3: Study Guide Monday, November...

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Perfect competition: large number of firms and households interacting, firms in a market produce undifferentiated or homogeneous products, new firms are free to enter to compete. Pure monopoly: industry in which a single produces a product for which there are no close substitutes; significant barriers to entry Imperfect competition: monopolies, oligopolies, and monopolistic competition The firm is the market Marginal revenue is lower than price Monopolies have no supply curves; they pick a point on the market demand curve Restricts output, charges higher prices, and earns positive profits Natural monopoly: efficient forms of a monopoly driven by the market/demand Rent-seeking behavior: consumes resources and adds to social costs, reducing social welfare even further Price discrimination: charging prices to different buyers A perfectly price discriminating monopolist is efficient Anti-trust policy: minimize monopolies Pure Monopoly Industry dominated by a few firms that are large enough to influence price Five forces model Price leadership: the dominant firm sets a price and allows competing firms to supply what
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Exam 3 Study Guide - Exam 3: Study Guide Monday, November...

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