AP Micro Unit 5 - Custom Scholars
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AP Micro Unit 5

question
natural monopoly
answer
it is natural for only one firm to produce because they can produce at the lowest cost
question
ATC
answer
average total cost
question
Which of the following statements is true for a monopolist at the profit-maximizing output level?
answer
Price exceeds marginal revenue
question
Why are monopolies inefficient?
answer
1. Price is too high
2. Quantity is too low
3. They cause deadweight loss (P > MC)
question
deadweight loss
answer
the reduction in economic surplus resulting from a market not being in competitive equilibrium
question
a profit maximizing monopolist selects its output level in the
answer
elastic region of its demand curve
question
maximizing total revenue in a monopoly
answer
point between marginal cost and average total cost
question
Prisoner's Dilemma
answer
A situation in which two (or more) actors cannot agree to cooperate for fear that the other will find its interest best served by reneging on an agreement.
question
dominant strategy
answer
a strategy that is best for a player in a game regardless of the strategies chosen by the other players
question
Nash Equilibrium
answer
a situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the other actors have chosen
question
oligopolistic competition
answer
occurs when only a few firms dominate a market
question
Three types of Oligopolies
answer
1. Price Leadership (no graph)
2. Colluding Oligopoly
3. Non Colluding Oligopoly
question
price leadership
answer
one firm sets its price first, and other firms then follow
question
Colluding Oligopolies
answer
when a group of businesses becomes a monopoly
question
kinked demand curve
answer
a perceived demand curve that arises when competing oligopoly firms commit to match price cuts, but not price increases
question
elastic demand
answer
A situation in which consumer demand is sensitive to changes in price
question
inelastic demand
answer
A situation in which an increase or a decrease in price will not significantly affect demand for the product
question
kinked demand curve model
answer
MC can move and quantity demanded won't change
question
price discrimination
answer
the business practice of selling the same good at different prices to different customers
question
in order to price discriminate, a firm must
answer
1. Have monopoly power 2. Be able to segregate the market 3. Consumers must not be able to resell the product
question
For price discriminating monopolies
answer
the MR equals the demand
1 of 21
question
natural monopoly
answer
it is natural for only one firm to produce because they can produce at the lowest cost
question
ATC
answer
average total cost
question
Which of the following statements is true for a monopolist at the profit-maximizing output level?
answer
Price exceeds marginal revenue
question
Why are monopolies inefficient?
answer
1. Price is too high
2. Quantity is too low
3. They cause deadweight loss (P > MC)
question
deadweight loss
answer
the reduction in economic surplus resulting from a market not being in competitive equilibrium
question
a profit maximizing monopolist selects its output level in the
answer
elastic region of its demand curve
question
maximizing total revenue in a monopoly
answer
point between marginal cost and average total cost
question
Prisoner's Dilemma
answer
A situation in which two (or more) actors cannot agree to cooperate for fear that the other will find its interest best served by reneging on an agreement.
question
dominant strategy
answer
a strategy that is best for a player in a game regardless of the strategies chosen by the other players
question
Nash Equilibrium
answer
a situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the other actors have chosen
question
oligopolistic competition
answer
occurs when only a few firms dominate a market
question
Three types of Oligopolies
answer
1. Price Leadership (no graph)
2. Colluding Oligopoly
3. Non Colluding Oligopoly
question
price leadership
answer
one firm sets its price first, and other firms then follow
question
Colluding Oligopolies
answer
when a group of businesses becomes a monopoly
question
kinked demand curve
answer
a perceived demand curve that arises when competing oligopoly firms commit to match price cuts, but not price increases
question
elastic demand
answer
A situation in which consumer demand is sensitive to changes in price
question
inelastic demand
answer
A situation in which an increase or a decrease in price will not significantly affect demand for the product
question
kinked demand curve model
answer
MC can move and quantity demanded won't change
question
price discrimination
answer
the business practice of selling the same good at different prices to different customers
question
in order to price discriminate, a firm must
answer
1. Have monopoly power 2. Be able to segregate the market 3. Consumers must not be able to resell the product
question
For price discriminating monopolies
answer
the MR equals the demand
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