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13 flashcardsby Darius
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1
MR
additional revenue from selling one more unit

MR = price for price taking businesses perfect comp
MR<price for price making businesses inother market structures
2
MC
cost of producing one more additional unit of output

operating near capacity = increasig M
not operating near capacity = constant MC
3
profits with MR and MC
increasing quantity gives profits when MR>MC
stop increasing quantity when MR<NC
Pmax = MC = MR
4
government policies for natural monopoly
public ownership
regulation
5
solutions to natural monopoly
crown corporations (TTC)
Rate of return regulation - setting price so the monopoly is only just covering average total cost and normal profit
6
nash equillibrium
confess-confess
this is the same as cheat cheat on any agreements of collusion
7
game theory
mathematical tool for understanding how players make decisions, taking into account what they expect their rivals to do
8
modern competition act 1986
criminal offences:
-price fixing
-bid rigging
-false/misleading advertising

civil offences:
-mergers - punished by fines and legal prohibitions
9
tragedy of commons
the oversuse and depletion of a resource that no one can be excluded from because of missing property rights
10
efficient pollution
balances the additional enviornmental benefits of lower pollution with the additional opportunity costs of reduced living standards

the socially desirable amount of pollution is not zero because the opportunity costs of reducing pollution will be greater than the additional benefits gained of lower pollution
11
when there are externalities smart choice is output where
MSC = MSB
12
input markets
households are sellers and businesses are buyers
13
income wealth
income - a flow
wealth - a stock
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