ECO-2023 Chapter Notes - Chapter 11: Game Theory, Price Elasticity Of Demand, Natural Monopoly
Document Summary
Licensing - a requirement that one obtain permission from the government in order to perform certain business activities or work in various occupations. Monopoly - a market structure characterized: (1) a single seller of a well-defined product for which there are no good substitutes and (2) high barriers to the entry of any other firms into the market for that product. Like other price searchers, the monopolist will expand its output until marginal revenue equals marginal cost. This profit-maximizing output rate can be sold at the price indicated on the firm s demand curve. When high barriers to entry are present, they will insulate the monopolist from competition from new entrants producing a similar product. Thus, in markets with high entry barriers, short-run monopoly profits will not be competed away through the process of entry. Oligopoly - a market situation in which a small number of sellers constitutes the entire industry. it is competition among the few.
