Flashcards
Chapter 10
Cards in this deck (7)
- 1Monopolistic Competitionlarge number of small sellers
easy entry and exit
*products are differentiated
ex. pizza restaurant
Advertising and branding are very important
Firms have modest control over price - 2Monopolistic Competition If firms earn positive Econ profits in the short run...New firms join
Prices fall
Continues until all firms earn zero Econ profit - 3Oligopolysmall number of large firms
significant barriers to entry
mutual independence: consider competitor's decisions
Ex: Should we open for business on Thanksgiving? - 4Cartelfirms collude to act jointly as a monopolist
price fixing
illegal in the US
tend to be unstable
(incentive to cheat) - 5Oligopoly: Kinked Demand Curve:if 1 firm raises prices, other forms will not follow
(to gain market share)
if 1 firm lowers prices, other firms will follow
(to keep market share) - 6Game Theory2 players (businesses, politicians, etc)
Discrete Strategy: Choose between two options (open or close on thanksgiving)
Noncooperative: players cannot communicate when making decisions - 7Payoff Matrix:Four possible outcomes of the game
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- Business/Economics Flashcards on Chapter 10 , created by Kennedy Dean on 28/11/2022.
- Created by
- Kennedy Dean · Nov 2022
- Updated
- Dec 1, 2022
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