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Economies of Scope
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When the total cost of producing two goods within the same firm is less than the cost of producing them in separate firms
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Diseconomies of Scale
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When long run average costs rise as output increases
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Economies of scale
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when the long run average cost fall as output increases
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Profit Maximization
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Marginal Cost equals Marginal Revenues
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Shut down decision rule
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When price is less than min average cost.
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Monopolistic Competiative Firms
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Have market power that permits pricing above marginal cost. The level of sales depends on the price it sets. Limited market power
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monopoly
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A market structure in which a single firm serves an entire market for a good that has no close substitutes
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cost complementaries
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exist when marginal cost of producing one output is reduced when the output of another product is increased.
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Deadweight lost (monopoly)
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The consumer and producer surplus that is lost due to the monopolist charging a price in access of marginal cost
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comparative advertising
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A form of advertising where a firm attempts to increase demand by differentiating its product from competing brands
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