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price setter
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A firm with at least some latitude to set it's on price
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pure monopoly
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The only supplier of a unique product with no close substitutes
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monopolistic competition
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an industry structure in which a large number of firms produce slightly differentiated products that are reasonably close substitutes for one another
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oligopoly
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an industry structure in which a small number of large firms produce products that are either close or perfect substitutes
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...
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The perfectly competitive firm faces a perfectly elastic demand curve for its product, the imperfectly competitive firm faces a downward sloping demand curve
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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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if a firm has market power, then it faces a(n)
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downward sloping demand curve
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increasing returns to scale (economies of scale)
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A production process is said to have increasing returns to scale if, when all inputs are changed by a given proportion, output changes by more than that proportion
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constant returns to scale
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A production process is said to have a constant returns to scale if, when all inputs are changed by a given proportion, output changes by the same proportion
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increasing returns to scale (economics scale)
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A production process is said to have increasing returns to scale if, when all inputs are changed by a given proportion, output changes by more than that proportion
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natural monopoly
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a monopoly that results from economies of scale (increasing returns to scale)
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marginal revenue
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The change in a firm's total revenue that results from a one unit change in output
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for a perfectly competitive firm:
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marginal revenue is exactly equal to the market price of the product
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to a monopolist:
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the marginal benefit of selling an additional unit is strictly less than the market price
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formula for a monopolist demand curve
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P = a - bQ
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formula for a monopolist marginal revenue curve
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MR = a - 2bQ
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...
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profit is maximizes at the level of output for which marginal revenue precisely equals marginal cost
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The primary distinction between the profit maximizing decision rule for a monopolist in a perfectly competitive firm is
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in the calculation of marginal revenue
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which of the following is the same for a monopolist and a perfectly competitive firm?
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the calculation of marginal cost
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if a monopolist has a straight line demand curve whose vertical intercept is a and who's horizontal intercept is Q0, in the marginal revenue curve will have a vertical intercept of
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a
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The profit maximizing level of output for a monopolist is inefficient because at the profit maximizing level of output:
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P > MC
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the profit-maximizing level of output for a monopolist is ______ the socially efficient level.
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less than
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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
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The practice of charging different buyers different prices for essentially the same good or service
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cost-plus regulation
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A method of regulation under which the regulated firm is permitted to change prices that cover explicit cost of production plus a mark up to cover the opportunity cost of resources provided by the firms owner
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perfect hurdle
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the threshold that completely segregates buyers who reservation price lies above it from others whose reservation prices lie below it, imposing no cost on those who jumped a hurdle
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when a firm with constant returns to scale used 30% more of all inputs in input prices remain unchanged, then
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average cost remains unchanged
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if the monopolist demand curve is P=50-10*Q, then marginal revenues are zero when Q equals ______ units.
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Q=2.5
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