ECON101 Lecture Notes - Lecture 45: Marginal Revenue, Oligopoly, Demand Curve

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purplemanatee917

7 Dec 2016

School

University of Waterloo

Department

Economics

Course

ECON101

Professor

Emmanuel Carvahlo

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ECON101 Full Course Notes

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Oligopoly: is the market structure or an industry composed of a small number of firms producing either a differentiated product or a homogenous product ex. More common oligopoly is a differentiated oligopoly. Demand curve is negatively sloped (insert graph: demand curve is relatively elastic as the product are extremely good substitutes. Better substitutes than in monopoly"s: total revenue is calculated by (cid:1844)= (cid:1842)1 (cid:1843, average revenue is (cid:1844)= (cid:3019)(cid:3018)=(cid:1842, marginal revenue (cid:1844)= (cid:3041) (cid:3046) (cid:3047)(cid:3042)(cid:3047) (cid:3045)(cid:3049)(cid:3041)(cid:3048) (cid:3041) (cid:3041) (cid:3044)(cid:3048)(cid:3041)(cid:3047)(cid:3047: marginal revenue- addition to total revenue, since the demand curve is negatively sloped the marginal revenue curve is negatively sloped also and will be located below the demand curve, cost curves. They can act independently (independent action): if a firm in an oligopoly industry decided that they are going to determine the. Normal profits, above normal, below normal profits. They can act jointly (joint action): to minimize uncertainty, to pursue above normal profits together.

Related Questions

1. A monopoly market structure is characterized by

a. large number of firms, standardized products, easy entry and exit.

b. large number of firms, differentiated products, easy entry and exit.

C. small number of firms, standardized or differentiated products, difficult entry.

d. one firm, a unique product without close substitutes, and impossible entry.

e. one firm, differentiated product, impossible entry.

2. Which of the following is not a characteristic of monopolistic competition?

a. Differentiated products

b. A downward-sloping demand curve for individual firms

c. Firms that are price makers

d. Impeded entry into the industry

e. A large number of firms

3. One factor that distinguishes oligopoly from other market structures is

a. the ease of entry into the market.

b. the interdependence of firms.

c. the slope of the demand curve.

d. the degree of product differentiation.

e. the amount of advertising expenditures.

lavenderbat941

1) A natural monopoly exists when:

a. A few firms collude to make one large firm

b. Firms enter the industry as a result of profit incentives

c. Economies of scale provide large cost advantages to having one firm produce the industry's output

d. Firms naturally maximize regardless of market structure

2) A(n) ____ is a single firm with ___, whereas a(n) ___ implies an industry with ____ firm(s) and ____ .

a. Monopoly; barriers to entry; oligopoly; few; no barriers to entry

b. Oligopoly; no barriers to entry; monopoly; many; easy entry and exit

c. Monopoly; barriers to entry; monopolistic competition; many; easy entry and exit

d. Monopolistic competitor; barriers to entry; monopoly; one; barriers to entry

3) In monopolistic competition:

a. Each firm produces a product identical to that of every other firm in the industry

b. Firms are aware of their strategic interdependence

c. Firms earn large economic profits in the long run

d. Firms earn zero economic profits in the long run

4) A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, like wheat farming, are alike in that:

a. There are many firms in each industry

b. Firms in both types of industries produce similar but not identical products

c. Barriers to entry in both industries are large

d. Firms in both types of industries produce identical products

byzantiumfish483

Match the following.

constant-cost industry	A market structure in which a large number of firms sell a homogenous product or service with no restrictions on entry or exit and each firm is a price-taker.
increasing-cost industry	The demand facing a price-taking firm.
long-run equilibrium	A firm produces zero output but must still pay its fixed costs.
marginal revenue product	Price below which a firm shuts down in the short run.
perfect competition	All firms produce where price equals long-run marginal cost, and economic profits are zero.
perfectly elastic demand	Industry in which input prices rise as all firms in the industry expand output.
shut down	Industry in which input prices remain constant as all firms in the industry expand output.
the shut-down price	The additional revenue earned by hiring one more unit of a variable input.

viridianhare336

ECON101 Lecture Notes - Lecture 45: Marginal Revenue, Oligopoly, Demand Curve

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