UNCERTAINTY AND INFORMATION ECONOMICS
reality, uncertainty usually exists. In general, people do not like uncertainty (incomplete information). So they buy insurance to alleviate its negative impact. The question is:
markets emerged at some point in history to solve an economic problem that society faces. So far we just focus on the equilibrium of a single market but have no idea how trading arose and ho
OLIGOPOLY AND ENTRY PREVENTION
oligopoly is a market or an industry in which there are only a few suppliers. Types of oligopoly
2 firms Triopoly: 3 firms Quadrupoly: 4 firms
MONOPOLY AND REGULATION
monopoly is an industry that produces a good or service for which no close substitute exists and in which there is ONE supplier that is protected from competition by a barrier preventing the
What's Game Theory?
Theory allows us to describe and analyze social and economic situations as if they were games of strategy. A Game is an abstract set of rules that constraints the behavior of players and defines
PERFECTLY COMPETITIVE MARKETS
Competition is defined by 4 conditions:
are identical; Each seller or buyer must be infinitesimally small compared to the market; Entry or exit is free (all resources
THEORY OF THE FIRM
of Technology in economics
-The set of constraints defining how one can combine or convert inputs into outputs is called a technology.