ECON 201 Lecture 10: 17 September - Econ 201 Notes (1)
Document Summary
Of a firm is made up of 3 basic characterstics: (# of firms, ease of entry and exit, product differentiation) (cid:862)lots(cid:863) of firms, identical products, easy entry/exit, price taker. Large number of firms, easy entry/exit, differentiated product, advertising is better, price maker. A few firms, each firm can affect the market, standardized or differentiated products, significant barriers to entry. Entry can occur, but it is not easy. Game theory (usually when there are 2 sellers) Concentration ratio: % of output attributed to the largest firms in a market. One firm: sole seller of a product. Unique product (no close substitutes) why monopolies arise. Main cause is barrier to entry other firms can"t enter the market.