What is productive efficiency
Producing at the lowest cost
Where on a diagram would the productive efficiency be
at the lowest point in the AC curve
What is allocative efficiency
Where goods are produced where there is economic welfare
where on a diagram would allocative efficiency be
where P = MC Or where MC = MR
what is tacit collusion
Collusion without explicit communication
What is overt collusion
An open agreement between firms
What are some advantages of monopolistic competition
- low barriers to entry
- higher level of innovation
- prices kept closer to MC
What are some disadvantages of monopolistic competition
- too many options may lead to irrational choices
- saturation of products may mean no economies of scale
- product differentiation with packaging may lead to waste
What is the dominant strategy
the best strategy for a company to maximise its return regardless of what the other firm does
What is the Nash equilibrium
Where a players strategy is the best outcome in response to everyone else’s - no players outcome can improve if they change it
Kinked demand - what does an increased price mean
more elastic - no firms move their prices up
Kinked demand - what does a decrease in price mean
more inelastic - other firms also decrease price
What are the best conditions for collusion
- weak regulation
- high joint market share between firms
- strong brands
- firms trust and communicate well
What is a cartel
a group involved in collusion
What causes cartels to break down
- disputes with quotas
- enforcement problems
- falling or fluctuating demand
- entry of non cartel firms
- whistle blowing
What changes on a monopoly diagram from the long run to the short run
nothing
Is demand elastic or inelastic in a monopoly market
Inelastic
What is economic efficiency
The effectiveness with which an economies scarce resources are used in making decisions
-
theme 115
-
theme 1 part 233
-
DEMAND15
-
SUPPLY49
-
1 10.1012
-
consumer and producer surplus13
-
market equilibrium8
-
economic systems21
-
the specialisation and division of labour23
-
price mechanism7
-
Key economic thinkers7
-
Price Elasticity of Demand28
-
Price elasticity of supply34
-
Functions of money7
-
income elasticity of demand9
-
Cross Elasticity of Demand8
-
Maximum wages3
-
Labour supply14
-
Labour Market63
-
Marginal, average ands short run costs22
-
Revenue And Profit19
-
Monopolistic Competition9
-
Oligopoly6
-
Game theory12
-
Monopoly19
-
Theme 3 - difficult areas19
