Question

Firm that produces a good for which there are no close substitutes in a market that other firms are prevented from entering because of entry barriers. Market consisting of a large number of firms selling a differentiated product with low barriers to entry. The identification of the producers and products that compete for consumers in a particular area. A ratio that measures the proportionate amount by which price exceeds marginal cost. Condition that makes it difficult for new firms to enter a market in which economic profits are being earned. Costs consumers incur when they switch to new or different products or services. When high switching costs make previous consumption decisions very costly to change. When a product's value rises as more consumers use 10. The additional revenue attributable to hiring an additional unit of a variable input. 11. as a function of output The demand function with demand price expressed PART V: Study Problem

a. consumer lock-in

b. inverse demand function

c. Lerner index

d. marginal revenue product

e. market definition

f. market power

g. monopolistic competition

h. monopoly

i. network externalities

j. strong barrier to entry

k. switching costs

Answer 1

2. Monopoly Firm that produces a good for which there are no close substitutes in a market that other firms are prevented from entering because of entry barriers.

3. Monopolistic competition Market consisting of a large number of firms selling a differentiated product with low barriers to entry.

4. Market definition The identification of the producers and products that compete for consumers in a particular area.

5. Lerner index A ratio that measures the proportionate amount by which price exceeds marginal cost.

6. Strong barriers to entry Conditions that makes it difficult for new firms to enter a market in which economic profits are being earned.

7. Switching costs Costs consumers incur when they switch to new or different products or services.

8. Consumer lock-in When high switching costs make previous consumption decisions very costly to change.

9. Network externalities When a product value rises as more consumers use it.

10. Marginal revenue product The additional revenue attributable to hiring an additional unit of a variable input.

11. Inverse demand function The demand function with demand price expressed as function of output.