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SATISFACTION: The process of successfully fulfilling wants and needs. A basic fact of life is that people want and need stuff to stay alive and to make that life more enjoyable. Satisfaction is the economic term that captures this wants-and-needs-fulfilling process. Satisfying wants and needs is actually the ultimate goal of economic activity, the end result of addressing the fundamental problem of scarcity, and, when you get right down to it, life itself.
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Lesson 20: Oligopoly | Unit 4: Analysis
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Page: 19 of 24
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- A handy way to analyze this type of market interdependence is through game theory.
- Game theory is an analysis that illustrates how the choices between two players affect the outcomes of a "game."
- Assume the market has only two firms, OmniCola and Juice-Up.
- Each is thinking about spending $50 million on advertising.
- This table presents alternative outcomes for different advertising choices by OmniCola and Juice-Up:
- If OmniCola and Juice-Up BOTH decide to advertising, then each receives $200 million in profit.
- However, if NEITHER OmniCola or Juice-Up decide to advertising, then each receives $250 million in profit.
- Alternatively, if OmniCola advertises but Juice-Up does not, then OmniCola receives $350 million in profit and Juice-Up receives only $100 in profit.
- But, if Juice-Up advertises and OmniCola does not, then Juice-Up receives $350 million in profit and OmniCola receives only $100 in profit.
- What to do?
- The end result is that both firms decide to advertise.
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HERFINDAHL INDEX A measure of concentration of the production in an industry calculated as the sum of the squares of market shares for each firm. This is one method of summarizing the degree to which an industry is oligopolistic and the concentration of market control held by the largest firms in the industry. Two other measures of industry concentration are the four-firm concentration ratio and the eight-firm concentration ratio.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time searching for rummage sales looking to buy either clothing for your kitty cats or a set of luggage without wheels. Be on the lookout for vindictive digital clocks with revenge on their minds.
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The average length of a "business lunch" is about 36 minutes.
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"We succeed in enterprises (that) demand the positive qualities we possess, but we excel in those (that) can also make use of our defects." -- Alexis de Tocqueville, Statesman
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WPI
Wholesale Price Index
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