Chapter 7.docx

2 Pages
111 Views
Unlock Document

Department
Economics
Course
ECO105Y1
Professor
Paul Cohen
Semester
Fall

Description
Chapter 7: The Power to Price (Monopoly and Competition) Monopoly: Only sellers of product/service no close substitutes available Market Power: businesses ability to set prices Price Maker: Pure monopoly with maximum power to set prices -Businesses can set any price they chose, but they can’t force consumers to buy. Even monopoly price makers must live by the law of demand. Price Taker: Business with zero power to set price different from market price. Extreme Competition: Many sellers producing identical products/ services. Market Structure: Characteristics that affect competition and pricing power— availability of substitutes, number of competitors, barriers to entry of new competition. -Markets can be defined narrowly on broadly. Move broadly = More substitutes and competition. More narrowly = fewer substitutes and competitors. Product Differentiation: Attempt to distinguish product from competitors products. Fewer competitors = More price power More competitors = Less price power Barriers to entry: Legal or economic barriers preventing new competitors from entering marker. Patents and Copyrights: Exclusive property rights to sell or license creations, protecting against competition. -Patents and copyrights give businesses shot-term monopoly power (incentive for innovation) but eventually expire (balance consumers desire for reasonably priced products/services) Economies of Scale: Average cost of producing falls as quantity (scale) of production increases. Average Total Costs = (Fixed Costs + Variable Costs)
More Less

Related notes for ECO105Y1

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit