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Micro Ch 10b
Stack based on Chapters 10-11 of Principles of Microeconomics 3e
| Term | Definition |
|---|---|
| cartel | a group of firms that collude to produce the monopoly output and sell at the monopoly price |
| collusion | when firms act together to reduce output and keep prices high |
| concentration ratio | an early tool to measure the degree of monopoly power in an industry; measures what share of the total sales in the industry are accounted for by the largest firms, typically the top four to eight firms |
| duopoly | an oligopoly with only two firms |
| four-firm concentration ratio | the percentage of the total sales in the industry that are accounted for by the largest four firms |
| game theory | a branch of mathematics that economists use to analyze situations in which players must make decisions and then receive payoffs based on what decisions the other players make |
| Herfindahl-Hirschman Index (HHI) | approach to measuring market concentration by adding the square of the market share of each firm in the industry |
| kinked demand curve | a perceived demand curve that arises when competing oligopoly firms commit to match price cuts, but not price increases |
| oligopoly | when a few large firms have all or most of the sales in an industry |
| prisoner’s dilemma | a game in which the gains from cooperation are larger than the rewards from pursuing self-interest |
Created by:
CheriseSLCC
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