ECON Chapter 7 Notes.txt
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What is market power?
The ability to alter the market price of a good or services
What is market demand?
The total quantities of a good or services people are willing and able to buy at alternative prices in a iven time period; the sum of individual demands.
What is a patent?
Government grant of exclusive ownership of an innovation.
What is a monopoloy?
A firm that produces the entire market supply of a particular good or services.
What is marginal revenue?
MR the change in total revenue that results from a one unit increase in quantity sold.
What is the profit maximization rule?
Produce at that rate of output where marginal revenue equals marginal cost.
What is the production decision?
The selection of the short run rate of output with existing plan and equipment.
Define barriers to entry.
Obstacles that make it difficult or impossible for would be producers to enter a particular market.
Define marginal cost pricing.
The offer of goods at a price equal to their marginal cost.
Define economies of scale.
Reductions in minimum averages costs that come about through increases in the size (scale) of plant and equipment.
Define natrual monopoly.
An industry in which one form can achieve economies of scale over the entire range of market supply.
Define contestable market.
An imperfectly competitive industry subject to potential entry if prices or profit increases.
Define predatory pricing.
Temporary price reductions designed to drive out competition.
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