ECON 2001.02 Study Guide - Final Guide: Monopolistic Competition, Sunk Costs, Oligopoly

• School: Ohio State University
• Department: Economics
• Course: ECON 2001.02
• Professor: All

Document Summary

Increasing returns: marginal product increases as more input is used: constant returns: marginal product increases proportionally with increases in input, fixed inputs: don"t change as output changes, variable inputs: do change as output changes. Chapter 10: the efficiency of competitive markets (efficiency of markets in competitive model) Product: general equilibrium, three prices, wage, interest rate, product price, all set so that each market clears in gen. eq, dem. = supply in goods market: competitive markets and econ. Economists see a role for govt. in correcting market failure. Monopolistic comp: a few firms selling distinct products. Chapter 12: monopoly, monopolistic competition and oligopoly: monopoly output, like all firms, seek to maximize profits. Occurs when decision makers must take reactions of others into account. In these games, the player with a dominant strategy chooses it and the other picks the best response: games without dom.