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Chapter 13
Micro Econ
Term | Definition |
---|---|
Monopoly | An industry controlled by a monopolist |
4 principal models of market structure | Perfect competition, monopoly, oligopoly, monopolistic competition |
Monopolist | A firm that is the only producer of a good that has no close substitutes |
Market Power | The ability of a monopolist to raise its price above the competitive level by reducing output |
Natural Monopoly | Exists when increasing returns to scale provide a large cost advantage to a single firm that produces all of an industry's output |
MR | a-2bQ |
New Drug | Patent Laws, monopoly, produce Q where MR=MC P>MC |
Generic Drug | Competitive market, Produce Q where MR=MC P=MC |
Antitrust policy | Government policies used to prevent or eliminate monopolies |
Single-price monopolist | one who charges all consumers the same price |
Price discrimination | Monopolists increase profits by charging different customers different prices for the same good |