BEC 5 - Impact of Market

  1. 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
  2. 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
  3. 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
  4. 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
  5. What are the three economic resources
    • land (natural resources)
    • labor (human resources)
    • capital (nonhuman resources acquired thru past investment)
  6. 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.
  7. 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
  8. 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
  9. 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
  10. At what point are profits maximized?
    When marginal revenues = marginal costs
  11. 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.
Author
BethM
ID
330648
Card Set
BEC 5 - Impact of Market
Description
Becker Review
Updated