Economics Terms: Surplus, Antitrust, Demand Law, Monopoly, Competition, Quizzes of Economics

Download Economics Terms: Surplus, Antitrust, Demand Law, Monopoly, Competition and more Quizzes Economics in PDF only on Docsity! TERM 1 Social Surplus DEFINITION 1 Social Surplus=Consumer Surplus+Producer surplus. Also can be SS=Total benefits- total cost TERM 2 Consumer Surplus DEFINITION 2 Buyer value (maximum price a consumer will pay) - price paid TERM 3 Producer Surplus DEFINITION 3 Producer Surplus= amount the producer is actually paid minus the amount that he would willingly accept TERM 4 Antitrust DEFINITION 4 form of gov. regulation or intervention that is aimed at dealing w/ market problem called a monopoly TERM 5 When regulation is necessary DEFINITION 5 1. when firms agree to charge the same price (horizontal price fixing) 2. when a firm w/ a large market share uses monopoly tactics to suppress competitive firms. 3. when 2 firms merge and changes comp. interaction (Continental and United) 4. when an up stream firm (manufacturer) uses contracts to control the econ decisions made by downstream firms (retailers) TERM 6 Error-Cost Framework DEFINITION 6 A framework for thinking about antitrust issues or problems. ECF seeks to consider the balance of costs that arise when antitrust regulations are implemented TERM 7 Law of Demand DEFINITION 7 Demand curves are downward sloping. Reductions in competition decrease output which will decrease social surplus. Increases in comp. will result in increased output and will increase soc. surplus TERM 8 Entry and Exit of Firms to a Market DEFINITION 8 In competitive markets positive economic profits attracts new entrants and neg. econ profits causes incumbent firms to exit. There are no longrun barriers to entry because of the changing market environment. TERM 9 Monopoly Market DEFINITION 9 High entry barriers ex. legal restrictions, patens, licenses etc. These barriers are borne by the entrant and not borne by incumbent firms TERM 10 Error Costs associated w/ False Negatives DEFINITION 10 costs that arise when courts allow an anti-competitve business practice.