Monopoly resources: key resources owned by a single company

Government regulation: The government gives exclusive power to individual companies

Production process: lower than the cost of large-scale enterprise production

Natural monopoly: only one producer is needed for efficient production (always economies of scale, decreasing average total cost) It is formed when there are economies of scale in the output range and the market size is just within the range of economies of scale. But as the market scale expands, natural monopoly will turn into a competitive market, and new companies will enter the industry.

Marginal revenue: The monopolist’s marginal revenue is lower than that of competitive firms (marginal revenue is less than price) To increase sales, the monopolist must lower the price of units sold (price ≠ marginal cost otherwise the firm will exit) The marginal revenue of the enterprise cannot be negative

Profit maximization: marginal revenue of production equals marginal cost, price is greater than marginal revenue, that is, P>MR=MC Implement low output and high prices

Monopoly deadweight loss: Potential consumers do not purchase goods worth more than their marginal cost

general price discrimination

perfect price discrimination

Examples: movie tickets, airline fares, discount coupons

Antitrust laws: control of corporate monopolies, price manipulation, and segmentation of market activities Prohibition of collusion between enterprises to reduce market competition

Regulation: The government regulates the pricing of monopolies

Public ownership: turning private monopoly into government monopoly

Inaction: When the market failure is relatively small, the government can choose not to act

Antitrust laws give the government the power to regulate mergers between companies Business mergers are more efficient and enhance social welfare, but they may also result in excessive market share and the formation of monopolies. (A monopoly market is not the most efficient market for resource allocation and will produce deadweight losses)

Monopoly: A sole seller firm with no substitutes

Oligopoly: A market in which a few sellers offer similar or identical products (several firms)

Monopolistic competition: a market in which many similar but not identical products are sold (differentiated products, many sellers, free entry and exit) Increase output when marginal revenue is greater than marginal cost When the price is higher than average total cost, that is, when the firm has an economic profit, new firms have an incentive to enter the market. until price equals average total cost

Perfect competition: many markets selling identical products (Same product, many sellers, free entry and exit)

Monopolistic competition is like a monopoly: the price charged is higher than the marginal cost, (marginal revenue is greater than the marginal cost of increasing its production) Monopolistic competition is like competition: in the long run firms can enter and exit the market freely (new firms will enter if the price is higher than average total cost) Product price equals average total cost and firm profit is zero, but price is higher than marginal cost A monopolistic competitor produces too little output compared to its most efficient level, making it difficult for policymakers to solve ① The cost for policymakers to regulate all production enterprises is huge; ② When pricing is based on marginal cost, the enterprise is losing money, and the government needs to provide subsidies.

Defender: Companies use advertising and brands to provide information to consumers and to compete on price and product quality.

Critics: Companies use advertising and branding to manipulate consumer preferences and reduce competition

Advertising reduces economic welfare: ① Advertising has a cost; ② Advertising exaggerates the quality differences between similar products; ③ When the demand curve is inelastic, charge a price higher than marginal cost Advertising enhances economic welfare: ① Provides useful information and improves the ability to allocate resources effectively; ② Promotes competition Brand benefits: ① Disclose product quality information in advance; ② Provide high-quality incentives for maintaining brand image

Oligopoly: A seller's market (several companies) in which a few sellers offer similar or identical products. A few companies in an oligopoly market act according to strategy

Game Theory: A general analytical theory that studies how people behave under various decisions.

Duopoly: Two oligarchic sellers

Prisoner's Dilemma: Explain why cooperation is difficult when cooperation is beneficial to both parties. (For example, oligarchs all face a prisoner's dilemma and each adopts a possessive strategy, resulting in a decline in the overall situation)

Nash equilibrium (strategy combination): When the strategies of all other players are determined, the strategy chosen by a player is optimal (maximum own benefit)

Dominant strategy: No matter what strategy other players choose, it is the optimal strategy (unique) for one player

Oligopolistic collusion is the same as monopolizing output, price equality, and efficiency. The oligopoly does not collude, the output is greater than that of the monopoly, the price is lower than that of the monopoly, and the oligopoly efficiency is high Oligopoly is similar to monopoly. In long-term equilibrium, the price of oligopoly is higher than that of competitive market and the quantity of product is lower than that of competitive market.

Restraints of Trade and Antitrust Laws

labor most important factors of production

Capital (currency, products) The value of factors of production or business inputs

land

The rental price of a factor is equal to the marginal product value of the factor

Compensating wage differentials: wage differences caused by the non-monetary characteristics of different jobs (coal mine or night shift worker wages)

Human capital: the accumulation of investments in people, such as education (significant contribution to economic development) ① Increase the utilization rate of physical capital; ② Generate residual value growth rate; ③ Improve labor productivity Ability (signaling companies to hire), effort and opportunity (education, experience, age) The power of economic competition weakens discrimination based on race

superstar phenomenon

above-equilibrium wages