AP课程微观经济学名词解释(6)

　　Please highlight critical terms;

　　*=not important for exam but you should know

　　Chapter Six Markets

　　Profit maximizing Criterion- the level of output at which marginal revenue equals marginal cost

　　price takers-sellers who cannot affect the price of the product by altering output. They exist in a purely competitive market, and may exist in others.

　　Shut-down decision-for perfect competition market, for the shut run the firm should shut down when does not cover average variable cost.

　　Monopoly-one firm constitutes the market or industry where there are no close substitutes available for consumers; a monopolist is a price-maker.

　　*Herfindahl Index-the sum of the squares of market shares of firms in a particular market or industry; used to measured the level of concentrated power of firms in industry

　　Price-Discrimination-this practice charges different customers with different prices for the same product

　　Dead-Weight Loss-the loss to society in the form of a reduction of consumer surplus from a competitive norm beyond any surplus reduction from a monopoly profit.

　　Natural Monopolies-these are monopolies for which competition would prevent the benefits of economies of scale.

　　Monopolistic Comeptition-this form of market structure is characterized by many medium-sized firms that need to innovate and differentiate their products in both price and non-price competition.

　　Oligopoly-this form of market structure is characterized by relatively few sellers who act interdependently and/or collusively to be price-markets. There are strong barriers to entry and exit.

　　Kinked Demand Curve-this curve illustrates the interdependence of rival under non-collusive oligopoly in which rivals match price decreases but do not match price increases of an oligopolist

　　Inefficiency-this is the expected outcome of monopolistic competition derived from underutilizing capacity

　　Game Theory- this theory involves choices made by players based on the reaction expected by opponents as in oligopolies

　　Nash Equilibrium-game theory in which the best choice for a player is based on the strategy of another player

　　Dominant strategy equilibrium- all the players find the perfect strategies.

　　Prisoner’s dilemma-explain dominant strategy and nash equilibrium some time associated to different combination of strategies.

　　*vertical mergers-mergers of firms at various steps in the production process from raw materials to finished products

　　*conglomerate mergers-combinations of firms from unrelated industries

　　*horizontal mergers- mergers of direct competions

　　US. Market antitrust legislation: The Sherman Act; The Clayton Act; The Robinson-Patman Act; The Celler-Kefauver Act;

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