Ch 12 - Market power: Monopoly and oligopoly 

________: market with few dominant sellers which together controls all or most of a markets share.

________ is equal to average total cost.

market with few dominant sellers which together controls all or most of a markets share

action of one firm affects the action of the other firms

market maintains its small number

exists when firms form an organisation or a group which prices the amount of output to be produced is decided

type of collusion that exists when firms charge the same price on goods they produce without having a formal agreement

the exclusive possession or control of the supply of or trade in a commodity or service.

exists when firms form an organisation or a group which prices the amount of output to be produced is decided

type of collusion that exists when firms charge the same price on goods they produce without having a formal agreement

Produces where marginal revenue is equal to marginal cost MR=MC

exists when firms in the market do not organise themselves to decide on the price and the quantity of outputs to be produced

It is possible that if a monopoly gets too big, it may experience diseconomies of scale. – higher average costs because it gets too big

The supernormal profit can enable more investment in research and development, leading to better products.

A monopoly is allocatively inefficient because in monopoly the price is greater than MC. P > MC. In a competitive market, the price would be lower and more consumers would benefit

A firm may gain monopoly power because it is very innovative and successful

action of one firm affects the action of the other firms