game theory
The theory that studies decision making in situations in which one player
anticipates the reactions of other players to its own actions.
Nash equilibrium
An equilibrium that results when each player is currently doing the best it
can, given the current behaviour of the other players.
collusion
An agreement among sellers to act jointly in their common interest.
Collusion may be overt or covert, explicit or tacit.
productive efficiency for the firm
When the firm chooses among all available production methods to
produce a given level of output at the lowest possible cost.
productive efficiency for the industry
When the industry is producing a given level of output at the lowest
possible cost. This requires that marginal cost be equated across all firms
in the industry.
allocative efficiency
A situation in which the output of each good is such that its marginal cost
is equal to its marginal value to consumers (the market price).
producer surplus
The price of a good minus the marginal cost of producing it, summed