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4.1 Individuals, firms, markets, and market failure (Consumer behaviour,…
4.1 Individuals, firms, markets, and market failure
Consumer behaviour
bounded rationality
imperfect information
utility theory
rational decision making
customers' tendency to shop around
Market structures
Monopoly
single seller
supernormal profit
price maker
price discrimination
high barriers to entry/exit
imperfect information
homogenous products
Monopolistic competition
product differentiation
good information
some price making ability
many buyers and sellers
spare capacity
abnormal profits in SR is an incentive for other firms to join the market
inefficiency
firm isn't producing at lowest point of AC
freedom of entry/exit
sunk costs
intense competition
Oligopoly
high barriers to entry/exit
high sunk costs
increased risk of entering
few firms
collusion
inefficient
CMA
market failure
price wars
game theory
non-price competition
interdependence
