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Provide (a) firm's control over price and quantity, (b) elasticity of demand, (3) long-run profitability, (4) strategy for perfect competition.
- (a) no control as there are many suppliers and buyers have lots of choice
- (b) perfectly elastic = the firm sells as much or little as it wants at a given price
- (c) no profitability, but a normal rate of return
- (d) adjust to price changes; become more efficient
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Provide (a) firm's control over price and quantity, (b) elasticity of demand, (3) long-run profitability, (4) strategy for monopolistic.
- (a) no control over price, but some over quantity
- (b) highly elastic
- (3) no profitability, but a normal rate of return
- (d) maintain market share thru product differentiation
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Provide (a) firm's control over price and quantity, (b) elasticity of demand, (3) long-run profitability, (4) strategy for oligopoly.
- (a) some control over price and quantity
- (b) Inelastic, with a kinked demand curve. They will ignore a price increase, but match a price decrease
- (c) some profit
- (d) maintain differentiation and market share, respond to price and volume chgs
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Provide (a) firm's control over price and quantity, (b) elasticity of demand, (3) long-run profitability, (4) strategy for monopoly.
- (a) total control over price and quantity
- (b) perfectly inelastic
- (c) positive economic profit
- (d) ignore market share, focus on production levels and profits
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What are the three economic resources
- land (natural resources)
- labor (human resources)
- capital (nonhuman resources acquired thru past investment)
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What is a monopsony? What is the effect?
A single employer in a market. The employer can set the wage price as there are typically more people wanting a job than there are jobs available.
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What is SWOT analysis? Which are an internal perspective vs an external perspective?
- Strengths, Weaknesses are an internal perspective
- Opportunities and Threats are an external perspective
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Which of the following concepts can best be used to understand oligopoly behavior and why? (1) Herfindahl index, (2) Interindustry competition, (3) Concentration ratio, (4) Game theory model
- The game theory model, which uses mathematical models of conflict and cooperation between rational decision makers.
- The participants have incomplete information about the others' intensions.
- No communication is allows b/t participants, but they know each other and will take into acct the other's likely behavior
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What is a natural monopoly?
When only one provider is able to supply a product at a lower cost than any potential competitor due to unique raw material, technology, or similar
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At what point are profits maximized?
When marginal revenues = marginal costs
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What is marginal revenue? What is marginal cost?
- The revenue gained by producing one additional unit of a good or service.
- The cost added by producing one additional unit of a product or service.
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