Microeconomics Test 3

  1. A market structure in which barriers to entry are low and many firms compete by selling similar, but not identical, products.
    Monopolistic competition
  2. Total Revenue
    TR = P x Q
  3. Average Revenue
    AR = TR/Q
  4. Marginal Revenue
    MR = change in TR/change in Q
  5. Profit
    Profit = (P - ATC) x Q
  6. refers to the situation where every good or service is produced at the lowest possible cost
    productive efficiency
  7. refers to the situation where every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it.
    allocative efficiency
  8. refers to all the activities necessary for a firm to sell a product to a consumer.
  9. the actions of a firm intended to maintain the differentiation of a product over time.
    brand management
  10. grants legal protection against other firms using its product's name.
  11. a market structure in which a small number of interdependent firms compete.
  12. anything that keeps new firms from entering an industry in which firms are earning economic profit.
    barriers to entry
  13. the situation when a firm's long-run average costs fall as it increases output.
    economies of scale
  14. the exclusive right to a product for a period of 20 years from the date the product is invented.
  15. the study of how people make decisions in situations in which attaining their goals depends on their interactions with others; in economics, the study of the decisions of firms in industries where the profits of each firm depend on its interactions with other firms.
    game theory
  16. actions taken by a firm to achieve a goal, such as maximizing profits.
    business strategy
  17. a table that shows the payoffs that each firm earns from every combination of strategies by the firms.
    payoff matrix
  18. an agreement among firms to charge the same price or otherwise not to compete.
  19. a strategy that is best for a firm, no matter what strategies other firms use.
    dominant strategy
  20. A situation in which each firm chooses the best strategy, given the strategies chosen by other firms.
    nash equilibrium
  21. an equilibrium in a game in which players cooperate to increase their mutual payoff.
    cooperative equilibrium
  22. an equilibrium in a game in which players do not cooperate but pursue their own self-interest.
    noncooperative equilibrium
  23. a game in which pursuing dominant strategies results in noncooperation that leaves everyone worse off.
    prisoner's dilemma
  24. a form of implicit collusion in which one firm in an oligopoly announces a price change and the other firms in the industry match the change.
    price leadership
  25. a group of firms that collude by agreeing to restrict output to increase prices and payoffs.
  26. a firm that is the only seller of a good or service that does not have a clsoe substitute.
  27. a situation in which the usefulness of a product increases with the number of consumers who use it.
    network externalities
  28. a government-granted exclusive right to produce and sell a creation.
  29. a government designation that a firm is the only legal provider of a good or service.
    public franchise
  30. a situation in which economies of scale are so large that one firm can supply the entire market at a lower average total cost than can two or more firms.
    natural monopoly
  31. the ability of a fim to charge a price greater than marginal cost.
    market power
  32. laws aimed at eliminating collusion and promoting competition among firms.
    antitrust laws
  33. a merger between firms in the same industry.
    horizontal merger
  34. a merger between firms at different stages of production of a good.
    vertical merger
  35. These markets are not concentrated, so mergers in them are not challenged.
    Post-merger HHI below 1,000
  36. These markets are moderately concentrated. Mergers that raise the HHI by less than 100 probably will not be challenged. Mergers that raise the HHI by more than 100 may be challenged.
    Post-merger HHI between 1,000 and 1,800
  37. Thse markets are highly concentrated. Mergers that increase the HHI by less than 50 points will not be challenged. Mergers that increase the HHI by 50 to 100 points may be challenged. Mergers that increase the HHI by more than 100 points will be challenged.
    Post-merger HHI above 1,800
Card Set
Microeconomics Test 3
Microeconomics: Test 3