Economics of Monopolies and Competition: A Comprehensive Study, Exams of Managerial Economics

Download Economics of Monopolies and Competition: A Comprehensive Study and more Exams Managerial Economics in PDF only on Docsity! ECO 500 FINAL pt2 1 / 3 `1 1. monopoly single seller 2. pure monopoly *one seller for some good with no close substitutes *seller has control over price ---> price MAKER *barriers to entry 3. monopolist de- mand curve downward sloping demand curve 4. no is there a supply curve for a monopolist 5. raise monopolist can the price by cutting back output 6. highest the monopolist can charge the price that the market will bear 7. *shrink markets *produce less 8. imperfect com- petition why are monopolies bad? *between perfect competition and monopoly *oligopoly *monopolistic competition 9. oligopoly *few sellers *other similar or identical products *interdependent 10. monopolistic competition *many sellers *product differentiation *free entry and exit 11. positive entry of a new firm provides new products and new con- sumer surplus, conveying a externality on con- sumers 12. negative entry of new firm takes customers and profit away from existing firms, conveying a externality on producers ECO 500 FINAL pt2 2 / 3 `1 13. incentive to ad- vertise 14. advertising spending *when firms sell differentiated products and charge prices above marginal cost *advertise to attract more buyers *highly differentiated goods: 10-20% of revenue *industrial products: little advertising *homogenous products: no advertising 15. game theory *how people behave in strategic situations *choose among alternative course of action *must consider how others might respond to the action he takes 16. duopoly *oligopoly with only two members *decide what quantity to sell *price is determine on the market by the demand 17. prisoner's dilem- ma a particular "game" between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial *the two prisoners together reach an outcome that is worse for each of them 18. nash equilibrium a stable state of a system involving the interaction of different participants, in which no participant can gain by a unilateral change of strategy if the strategies of the others remain unchanged 19. dominant strate- gy strategy equilibria dominant strate- gy equilibrium 20. Sherman An- titrust Act if a strictly exists for one player in a game, that player will play that in each of the game's Nash . If both players have a strictly , the game has only one unique Nash elevated agreements among oligopolists from an unen- forceable contract to a criminal conspiracy 21. the clayton act further strengthened the anti-trust laws