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cost-plus regulation
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a method of regulation under which the regulated firm is permitted to charge a price equal to its explicit costs of production plus a markup to cover the opportunity cost of resources provided by the firm's owners
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hurdle method of price discrimination
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the practice by which a seller offers a discount to all buyers who overcome some obstacle
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marginal revenue
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the increase in total revenue obtained by producing and selling one more unit of output
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market power
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a firm's ability to raise the price of a good without losing all its sales
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monopolistic competition
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a market structure in which a large number of firms sell slightly differentiated products that are reasonably close substitutes for one another
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natural monopoly
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a monopoly that results from economies of scale
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oligopoly
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a market in which there are only a few rival sellers (each of which is called an oligopolist)
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perfect hurdle
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one that completely segregates buyers whose reservation prices lie above some threshold from others whose reservation prices lie below it, imposing no cost on those who jump the hurdle
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perfectly discriminating monopolist
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a firm that charges each buyer exactly his or her reservation price
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price discrimination
answer
the practice of charging different buyers different prices for essentially the same good or service
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price setter or imperfectly competitive firm
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a firm with at least some latitude to set its own price
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price taker or perfectly competitive firm
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a firm that has no influence over the price of the product it sells
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pure monopoly
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a market in which there is only one supplier of a unique product with no close substitutes
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rule for profit maximization
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profits are maximized at the quantity of output where marginal revenue equals marginal cost
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technical efficiency in production
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a condition that occurs when the least possible amounts of inputs are used to produce a given level of output
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