Pure monopoly: The only supplier in an industry - with a 100 percent market share.Price discrimination: Charging different prices to different groups of consumers for the same product for reasons not associated with the marginal cost of supply.Predatory pricing: A deliberate strategy of driving competitors out of the market by setting very low prices or selling below AVC.Natural monopoly: When long-run average cost (LRAC) falls continuously over a large range of output so only one firm can fully exploit economies of scale.Monopoly profit: Supernormal profit to a firm with market power, achieved when price (AR) > average cost.Market power: Power to raise price above marginal cost without fear of losing supernormal profits to new entrants.Market liberalisation: Introducing competition in previously monopolistic sectors such as energy supply, retail banking and postal services.Limit pricing: When a firm sets price low enough to discourage new entrants into the market.Industry regulator: Appointed by government to oversee how a market works and the outcomes that result for producers and consumers.Entry barriers: Strategies used to protect the market power of established firms whilst maintain supernormal profits.Dominant firm: Business with more than 40 percent of market share.Deadweight loss: Loss in producer & consumer surplus due to an inefficient level of production.Concentration ratio: Measures the proportion of an industry's output or employment accounted for by the largest firms.ex: electricity generation and water distribution. Bi-lateral monopoly: Where a monopsony buyer faces a monopsony seller in a market one firm can supply the entire market at a lower cost than two or more competing firms.Monopoly power in markets - some key terms to revise Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License. Greenlaw, David Shapiroīook title: Principles of Microeconomics 2e Use the information below to generate a citation. Then you must include on every digital page view the following attribution: If you are redistributing all or part of this book in a digital format, Then you must include on every physical page the following attribution: If you are redistributing all or part of this book in a print format, Want to cite, share, or modify this book? This book uses the Study with Quizlet and memorize flashcards containing terms like pure monopoly. What is it then? It is both a subject area and a way of viewing the world. It is not primarily about money or finance. As the Bring it Home feature just mentioned, making choices is at the heart of what economists study, and your decision to take this course is as much as economic decision as anything else.Įconomics is probably not what you think. What is economics and why should you spend your time learning it? After all, there are other disciplines you could be studying, and other ways you could be spending your time. variable cost., A monopolists demand curve is a vertical line. Each chapter in this book will start with a discussion about current (or sometimes past) events and revisit it at chapter’s end-to “bring home” the concepts in play. Study with Quizlet and memorize flashcards containing terms like The cost that cannot be recovered for a considerable period of time is known as a(n) incremental cost. This leads us to the topic of this chapter, an introduction to the world of making decisions, processing information, and understanding behavior in markets -the world of economics. “Economists love nothing better than when deep and liquid markets operate under conditions of perfect information,” says Jessica Irvine, National Economics Editor for News Corp Australia. How many of you chose a university without checking out its Facebook page or Twitter stream first for information and feedback?Īs you will see in this course, what happens in economics is affected by how well and how fast information disseminates through a society, such as how quickly information travels through Facebook. Outlets like Facebook and Twitter are altering the process by which we make choices, how we spend our time, which movies we see, which products we buy, and more. Now we have another avenue in which to gather information-social media. Despite the lack of perfect information, we still make hundreds of decisions a day. Economists call this “imperfect” because we rarely have all the data we need to make perfect decisions.

To post or not to post? Every day we are faced with a myriad of decisions, from what to have for breakfast, to which route to take to class, to the more complex-“Should I double major and add possibly another semester of study to my education?” Our response to these choices depends on the information we have available at any given moment.

Chapter 12 monopoly economics quizlet