1 Equilibrium of a firm under perfect competition in the short-run. A firm is under equilibrium at that point where it maximizes its profits. Profit depends upon two factors Revenue Structure Cost Structure
2 Equilibrium of a firm under perfect competition in the short-run. Revenue Structure The average revenue curve under perfect competition is a horizontal line, as each firm is a price taker. The marginal revenue curve coincides with the average revenue curve. AR = MR.
3 Y Equilibrium of a firm under perfect competition in the short-run. R E V E P AR=MR N E U O output X Revenue Structure
4 Equilibrium of a firm under perfect competition in the short-run. Cost Structure Cost structure is represented by U-shaped average cost curve. The marginal cost curve cuts the average cost curve at the lowest point of the AC curve.
5 Equilibrium of a firm under perfect competition in the short-run. Cost Structure
6 Equilibrium of a firm under perfect competition in the short-run. Necessary condition for equilibrium of a firm under perfect competition in the short run is MR = MC
7 Equilibrium of a firm under perfect competition in the short-run. output
8 Equilibrium of a firm under perfect competition in the short-run. It is observed that MR = MC at point B and point E. But at point B, the firm has not made any profit so that cannot be the point of profit maximization. Hence the firm is at equilibrium when it produces output OM. Condition for equilibrium is MR=MC Sufficient condition is MR = Rising MC.
9 Equilibrium of a firm under perfect competition in the long-run. Point E, in the next diagram is the point of equilibrium as MR = rising MC. Let price increase from OP to OP 1. New revenue structure is AR 1 + MR 1. T is the new point of equilibrium as MR 1. = rising MC. At this point firm enjoys super-normal profit of M 1 T -M 1 S. This extra profit attracts new entrants, supply increases, price falls & equilibrium is restored at point E.
10 Equilibrium of a firm under perfect competition in the long-run. Point E, in the diagram below is the point of equilibrium as MR = rising MC.
11 Equilibrium of a firm under perfect competition in the long-run. Point E, in the earlier diagram is the point of equilibrium as MR = rising MC. Let price decrease from OP to OP 2. New revenue structure is AR 2 + MR 2. T 1 is the new point of equilibrium as MR 2. = rising MC. At this point firm suffers a loss of M 2 S 1 - M 2 T 1. This loss forces a firm to exit, supply decreases, price goes up & equilibrium is restored at point E.
12 Equilibrium of a firm under perfect competition in the long-run. Point E, in the earlier diagram is the point of equilibrium as MR = rising MC. Thus we see that at point E AR = MR = MC = Min AC Hence equilibrium is restored at the point E.
13 The shut down point of a firm. Will a firm take an exit as soon as it incurs loss? Answer is no, instead it will try to minimize loss. But if the revenue is not enough to cover its variable cost, the firm must take an honorable exit. This point of exit is indicted by S on the next diagram.
14 The shut down point of a firm. This point of exit is indicted by S on diagram.
15 Equilibrium under Monopoly. We have seen that a firm is under equilibrium at that point where it maximizes its profits. And profit depends upon two factors Revenue Structure Cost Structure
16 Equilibrium under Monopoly. Revenue Structure In case of monopoly the average revenue curve slopes downwards from left to right and the marginal revenue curve lies below it. This implies that monopolist can sell more only at lower price. Besides as the AR is falling, the MR falls faster than the AR.
17 Equilibrium under Monopoly. Revenue Structure
18 Equilibrium under Monopoly. Cost Structure The cost structure under monopoly has no element of uniqueness. In the sense that just as under perfect competition the average cost curve under monopoly is also U-shaped in the short-run and the marginal cost curve cuts the AC at the lowest point of the AC curve. Golden Rule for profit maximization MR = MC
19 Equilibrium under Monopoly. Cost Structure
20 Equilibrium under Monopoly. Revenue & Cost Structure Let us compare monopolist s MR curve with MC curve. Please see the next diagram Until MR is above MC, for every additional unit sold, he earns more than the additional cost he incurs. If produces additional nth unit after MR = MC, he earns less than, the additional cost he incurs; resulting in a loss for that unit. He is in equilibrium at output OM
21 Equilibrium under Monopoly. Revenue & Cost Structure
22 Equilibrium under Monopoly. Revenue & Cost Structure Now we introduce AR and AC curves in the next diagram. It is observed that E is the point of equilibrium at which MR = MC. At this point the monopolist produces OM output. His total earnings are MQ and cost is MR. Difference between the two indicated by area PQRS is the monopolist s supernormal profit.
23 Equilibrium under Monopoly. Revenue & Cost Structure
24 Equilibrium under Monopoly. Effect of Elasticity of Demand It must be noted, that the monopolist will be in equilibrium if elasticity of demand is over 1 or equal to one. But if elasticity is below 1, then marginal revenue becomes negative and the monopolist cannot be in equilibrium.
25 Comparison between Perfect Competition and Monopoly. We now compare Perfect Competition and Monopoly with respect to price, output, profit, revenue and cost considerations. PRICE : In monopoly a firm is a price maker, but in perfect competition it is a price taker.
26 Comparison between Perfect Competition and Monopoly. Output : In perfect competition the firm produces that output at which its AC is the lowest. Please see next diagram. Monopolist does not go to that output. He stops at the output where his MR = MC. If he produces more to reach the lowest AC, earnings from additional units (MR) are less than their MC, resulting in a loss.
27 Output : Comparison between Perfect Competition and Monopoly. Hence under monopoly the output is restricted, while under competition it is optimum.
28 Comparison between Perfect Competition and Monopoly. Profit : A firm under perfect competition enjoys only normal profits in the long run. But a monopolist normally enjoys super normal profits, even in the long-run.
29 Comparison between Perfect Competition and Monopoly. Revenue : A firm under perfect competition faces a horizontal revenue curve. Hence its AR = MR. But in case of monopoly the AR curve is downward sloping and MR curve falls faster than the AR curve.
30 Comparison between Perfect Competition and Monopoly. Cost : A firm under perfect competition cannot be in equilibrium under falling costs. It is in equilibrium only under lowest cost. But in case of monopoly a firm can be in equilibrium under falling, rising or constant costs.
31 Price Discrimination or Discriminating Monopoly. Price discrimination is defined as the act of selling the same article, produced under a single control, at different prices to different buyers. The firm practicing it is called Discriminating Monopolist.
32 Price Discrimination or Discriminating Monopoly. Types of Price Discrimination Personal- different prices charged to different buyers ( may be on their ability to pay ). Regional _ different prices charged in different local markets. Trade - different prices charged to buyers for use of product for different purposes. (industrial or domestic)
33 Conditions under which Price Discrimination is Possible Imperfect Competition: under perfect competition there are several sellers, buyers have perfect knowledge, & firms are price takers, hence only one price prevails. For price discrimination imperfect competition is required.
34 Conditions under which Price Discrimination is Possible Absence of re-sale possibility : If such possibility existed, buyers offered lower price would buy and sell product at higher price.
35 Conditions under which Price Discrimination is Possible Differences in Elasticity of Demand : If submarkets are arranged in ascending order of their elasticities, the highest price can be charged in the least elastic market and the lowest price in the most elastic market.
36 Conditions under which Price Discrimination is Possible Consumer s Peculiarities: Buyers need to be ignorant of prices charged to other buyers or at other locations. They tend to be indifferent to minor changes in prices. They often carry illusion that high price normally means better quality.
37 Conditions under which Price Discrimination is Possible Personal Services: Doctors, Lawyers, Hair Dressers can charge higher prices as they provide personal service.
38 Conditions under which Price Discrimination is Possible Regional Distances & Frontier Barriers: Transport costs, tariffs and duty differentials allow firms to charge higher prices.
39 Profit maximization under Price Discrimination. The aim of discriminating monopolist is to maximize profits. We can thus derive the condition of profit maximization under price discrimination by extending the normal theory of the firm to a case where there are two or more markets instead of just one market. The study makes following assumptions:-
40 Profit maximization under Price Discrimination. we need following assumptions:- There are two markets (A & B) The aim of monopolist is to maximize profits He enjoys monopoly in both markets. Elasticity of demand for his product is different in two markets. ( if it was identical, he could not have two different prices in markets) Monopolist can have two prices in two markets. Buyers in one market are not able to trade in the other market.
41 Profit maximization under Price Discrimination. With these assumptions we shall see How does monopolist decide the size of the output? How is output distributed over two markets? What price will he charge in each market? How is the profit maximized?
42 Profit maximization under Price Discrimination. How does monopolist decide the size of the output? The condition for profit maximization is MR = MC. The monopolist uses the given marginal cost curve, aggregates the marginal revenue from Market A & B; and produces the output up to the point where combined MR = MC.
43 Profit maximization under Price Discrimination. How is output distributed over two markets? He distributes the output in two markets in such a way that marginal revenue from both markets is same. If MR in market A was more, he would have shifted output from market B to A. This will continue till MR in both markets is equal.
44 Profit maximization under Price Discrimination. What price will he charge in each market? Once the output gets distributed in the two markets so that MR from each market is equal, the AR curve of each market indicates the price prevailing in each market. Price is higher in the market with low elasticity of demand and low in relatively elastic market.
45 Profit maximization under Price Discrimination. How is the profit maximized? In the market where demand is relatively inelastic, monopolist can increase price and earn more as demand is insensitive to rise in price. In the other market with elastic demand he can lower price, and earn more by transferring output into this market. It is necessary that MR in both markets is the same and it is also equal to the MC.
46 Profit maximization under Price Discrimination. Л Maximum where combined MR = MC
47 Profit maximization under Price Discrimination. We can see this relationship again by drawing a diagram for market A where demand is relatively inelastic. Second one for the other market where demand is elastic. In the third panel marginal revenue from the two markets is summed up.
48 Profit maximization under Price Discrimination. monopoly in both markets
49 Profit maximization under Price Discrimination. Monopolist produces output OM where combined MR = MC. He sells quantity OM a in market A & OM b in market B. He sells at price P a in market A & at P in market B. Note the price P b a is higher in the market A where demand is inelastic. Total profit earned is indicated by area ZTEG.
50 Dumping. Dumping means selling a product in foreign market at a price lower than in the home market. In home market he is a monopolist, his AR H is sloping downwards, but in the world market, he faces perfect competition so his AR is horizontal & equal to MR w. He sells the output OH in home market as MR H he gets here, is higher than MR w in the world market. Once his MR w is more than MR H, he starts selling in the world market until point E where his combined MR = MC.
51 Dumping. Dumping
52 Dumping. It is observed that his price P H in home market where he is a monopolist, is higher than the price P w in the world market, where he is dumping his output. His total output is OM, and he sells OH in home market and HM overseas. His profit is shown by area ZTEG.
53 Dumping. Technical & Financial reasons for Dumping:- To maximize profits. He cuts short his sales in the home market to OH and sells balance HM in world market where his MR is more. To increase output to sell in the world market and thus enjoy economies of scale that bring down his costs. To penetrate into foreign markets. To capture foreign markets.
54 Monopolistic Competition. Monopolistic competition is that market category in which there is keen competition, though not perfect, among a group of monopolists producing same, though not identical product e.g. soaps, watches etc.
55 Monopolistic Competition. Features : - Large number of firms. Absence of interdependence. Freedom of Entry. Product Differentiation this specialty of firms products offers monopolistic advantage to them. Selling Costs- to create demand for firm s products. Concept of Group producing differentiated products.
56 Selling Costs Selling costs are incurred in order to alter the position or shape of demand curve for the product. Production Cost Selling Cost Incurred in all Peculiar to monopoly markets. markets. To meet demand. To create demand. Influence Supply. Influence Demand. In proportion to No relation to output. output. Considered essential. Considered wasteful.
57 Are wasteful. Selling Costs Are not a waste. Costs are incurred in retaliation. They result in rise in price. Mislead consumers. Customers spend on transport to buy from a specific market. Not effective Are informative & persuasive. Create large scale employment Prices do not necessarily rise because of advertisements.
58 Equilibrium under monopolistic competition Both AR & MR curves are downward sloping, & MR is below AR. The cost curve as before is U-shaped. Equilibrium is at point E, where MR = MC. Monopolist makes super normal profits PQRS in the short-run.
59 Equilibrium under monopolistic competition
60 Equilibrium under monopolistic competition To determine equilibrium in the long run, it is assumed that costs will not change ( a heroic assumption). Looking at super normal profits in the short-run, more firms will enter in the long-run. AR and MR will reduce and curves will move to the left until AC curve is tangent to AC curve at its minimum point. New equilibrium is at E 1, where new MR = MC. And at OM 1, AR = AC
61 Equilibrium under monopolistic competition There is only normal profit in the long run.
62 Oligopoly Competition among the few. Oligopoly is that market structure in which a few sellers who clearly recognize their interdependence, produce bulk of the market output.
63 Oligopoly Classification : Pure oligopoly a few sellers sell identical product while in differentiated oligopoly they sell different products. Open oligopoly firms are free to enter the market, not so in closed oligopoly. Partial oligopoly has a price leader, while in full oligopoly there is no leader, no follower. Collusive oligopoly- there is agreement on price to be charged; not so in noncollusive.
64 Characteristics: Oligopoly Competition among few. Interdependence among rival firms. Possibility of collusion by price agreement. Rigidity in pricing. Barriers to entry of new firms. Excessive expense on advertising. Indeterminateness agreements may not hold good, cooperation may give way to fight until death of a rival.
65 Oligopoly The kinky demand curve. A peculiar characteristic of oligopoly. In oligopoly action of a firm depends on reaction of consumers as well as that of its rivals. This lends typical shape to its demand curve. When a firm lowers the price, if rivals also lower price, the demand for the firm s products will not rise substantially. This is shown by relatively inelastic curve KD 1. Now when the firm raises price but rivals do not raise their prices, demand for firm s products will fall sharply shown by KD.
66 Oligopoly This sudden bend in the curve results in kinky demand curve in oligopoly. output
67 Oligopoly The kinky demand curve. A peculiar characteristic of oligopoly. How does MR curve appear in the diagram? For the first part up to kink, MR will be halfway between KD & Y axis. KD will meet Y axis at point T, and TEG emerges as MR curve. After the kink, KD 1 is the AR curve, it meets Y axis at point L. LDF which is halfway, therefore, is the MR curve after the kink. HF on this curve is the MR after TEG, seen above, indicating that MR has become discontinuous.
68 Oligopoly Thus where average revenue has a kink, the marginal revenue becomes discontinuous.
www.edupristine.com Describe the characteristics of different market structures: perfect competition, monopolistic competition, oligopoly, and pure monopoly Prerequisite Characteristics of different market
UNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES Monopolistic Competition Market Structure Perfect Competition Pure Monopoly Monopolistic Competition Oligopoly Duopoly Monopoly The further right on
MBA 640 Survey of Microeconomics Fall 2006, Quiz 6 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly is best defined as a firm that
Microeconomics Instructor Miller Practice Problems Monopolistic Competition 1. A monopolistically competitive market is described as one in which there are A) a few firms producing an identical product.
Practice Questions Week 8 Day 1 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The characteristics of a market that influence the behavior of market participants
Labelling Graph Axis Correctly The Industry Price S D The Firm Quantity MC AC AR=MR Output Perfect Competition All of the units are sold at the same price because no single buyer or seller is large enough
Problems on Perfect Competition & Monopoly 1. True and False questions. Indicate whether each of the following statements is true or false and why. (a) In long-run equilibrium, every firm in a perfectly
Chapter 6 Competitive Markets After reading Chapter 6, COMPETITIVE MARKETS, you should be able to: List and explain the characteristics of Perfect Competition and Monopolistic Competition Explain why a
CHAPTER CHECKLIST Perfect Competition Chapter 12 1. Explain a perfectly competitive firm s profit maximizing choices and derive its supply curve. 2. Explain how output, price, and profit are determined
MPP 801 Perfect Competition K. Wainwright Study Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Refer to Figure 9-1. If the price a perfectly
26 : Perfect Competition 1 Recap from last Session Features of Perfect Competition Demand and Revenue of a firm Short run Equilibrium Market supply and firm s supply analysis Session Outline Market supply
AP Micro Chapter 8 Test Multiple Choice Identify the choice that best completes the statement or answers the question. 1. There would be some control over price within rather narrow limits in which market
Models of Imperfect Competition Monopolistic Competition Oligopoly Models of Imperfect Competition So far, we have discussed two forms of market competition that are difficult to observe in practice Perfect
Introduction to Microeconomics Monopolistic Competition Introduction In this document we refer to imperfect competition as monopolistic competition. Monopolistic competition is described as the situation
In the Name of God Sharif University of Technology Graduate School of Management and Economics Microeconomics (for MBA students) 44111 (1393-94 1 st term) - Group 2 Dr. S. Farshad Fatemi Perfect Competition
UNIVERSITY OF CALICUT SCHOOL OF DISTANCE EDUCATION BA ECONOMICS III SEMESTER CORE COURSE (2011 Admission onwards) MICRO ECONOMICS - II QUESTION BANK 1. Which of the following industry is most closely approximates
MICROECONOMICS: UNIT III COST OF PRODUCTION & THEORY OF THE FIRM (C) positive and $0 positive. At zero output, variable costs are zero. 2. Based on the information in the table above, the total cost of
Chapter 6 The Two Extremes: Perfect Competition and Pure Monopoly Learning Objectives List the four characteristics of a perfectly competitive market. Describe how a perfect competitor makes the decision
Goldwasser AP Microeconomics Chapter 16 Monopolistic Competition and Product Differentiation BEFORE YOU READ THE CHAPTER Summary This chapter develops the model of monopolistic competition. It also discusses
Chapter 13 Perfect Competition 13.1 A Firm's Profit-Maximizing Choices 1) What is the difference between perfect competition and monopolistic competition? A) Perfect competition has a large number of small
Managerial Economics & Business Strategy Chapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets I. Perfect Competition Overview Characteristics and profit outlook. Effect
Chapter 16 Monopolistic Competition and Oligopoly Market Structure Market structure refers to the physical characteristics of the market within which firms interact It is determined by the number of firms
Name: Date: 1. Most electric, gas, and water companies are examples of: A) unregulated monopolies. B) natural monopolies. C) restricted-input monopolies. D) sunk-cost monopolies. Use the following to answer
MBA 640, Survey of Microeconomics Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The "law of demand" states that, other
Chapter 6 We recall that perfect competition was theorised as a market structure where both consumers and firms were price takers. The behaviour of the firm in such circumstances was described in the Chapter
Managerial Economics & Business Strategy Chapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets McGraw-Hill/Irwin Copyright 2010 by the McGraw-Hill Companies, Inc. All
ECN 201, Winter 1999 NAME: Prof. Bruce Blonigen SS#: MIDTERM 2 - Version A Tuesday, February 23 **************************************************************************** Directions: This test is comprised
CHAPTER 11 Perfect Competition & Monopoly Savvas C.Savvides Learning Outcomes Upon completion of this chapter, you will be able to: Explain how firms in perfect competition determine output and why firms
University of Lethbridge Department of Economics ECON 1010 Introduction to Microeconomics Instructor: Michael G. Lanyi Lab #11 Chapter 11 Perfect Competition 1) Perfect competition occurs in a market where
Monopoly Problem 1 (APT 93, P3) A single airline provides service from City A to City B. a) Explain how the airline will determine the number of passengers it will carry and the price it will charge. b)
Intermediate Microeconomics Chapter 13 Monopoly Non-competitive market Price maker = economic decision maker that recognizes that its quantity choice has an influence on the price at which it buys or sells
Chap 13 Monopolistic Competition and Oligopoly These questions may include topics that were not covered in class and may not be on the exam. MULTIPLE CHOICE. Choose the one alternative that best completes
Perfect Competition Chapter 10 CHAPTER IN PERSPECTIVE In Chapter 10 we study perfect competition, the market that arises when the demand for a product is large relative to the output of a single producer.
Economies of Scale, Imperfect Competition, and International Trade Chapter 6 Intermediate International Trade International Economics, 5 th ed., by Krugman and Obstfeld 1 Overview patterns of trade can
Microeconomics, 2 nd Edition David Besanko and Ron Braeutigam Chapter 13: Market Structure and Competition Prepared by Katharine Rockett Dieter Balkenborg Todd Kaplan Miguel Fonseca Bertrand with complements
R. Larry Reynolds Pure Competition urely competitive markets are used as the benchmark to evaluate market P performance. It is generally believed that market structure influences the behavior and performance
Unit 8. Firm behaviour and market structure: monopolistic competition and oligopoly Learning objectives: to understand the interdependency of firms and their tendency to collude or to form a cartel; to
Ecn 221 - Unit 10 Monopolistic Competition & Oligopoly An industry characterized by monopolistic competition is similar to the case of perfect competition in that there are many firms, and entry into the
Competitive markets and perfect competition Learning Objectives At the end of this chapter you will be able to Realise that perfect markets do not exist but that some degree of perfection is possible Understand
Pre-Test Chapter 23 ed17 Multiple Choice Questions 1. The kinked-demand curve model of oligopoly: A. assumes a firm's rivals will ignore a price cut but match a price increase. B. embodies the possibility
25 : Perfect Competition 1 Session Outline Features of Perfect Competition Demand and Revenue of a firm Short run Equilibrium Market supply and firm s supply analysis Perfect competition market is a most
Summary Chapter 12 Monopoly Defining Monopoly - A monopoly is a market structure in which a single seller of a product with no close substitutes serves the entire market - One practical measure for deciding
Pure Competition Pure Monopoly Monopolistic Competition Oligopoly Characteristics: Rare in the real world But helps analyze industries which are similar to pure competition Many sellers means that no one
ANSWERS TO END-OF-CHAPTER QUESTIONS 23-1 Briefly indicate the basic characteristics of pure competition, pure monopoly, monopolistic competition, and oligopoly. Under which of these market classifications
A2 Micro Business Economics Diagrams Advice on drawing diagrams in the exam The right size for a diagram is ½ of a side of A4 don t make them too small if needed, move onto a new side of paper rather than
Introduction Countries engage in international trade for two basic reasons: Countries trade because they differ either in their resources or in technology. Countries trade in order to achieve scale economies
Exam 3 Student Name: Microeconomics Exam Dates: Week 15, late April-early May, 2007 Instructions: I) On your Scantron card you must print three things: 1) Print your full name clearly; 2) Print the day
In this chapter, look for the answers to these questions: What is a perfectly competitive market? What is marginal revenue? How is it related to total and average revenue? How does a competitive firm determine
Market is a network of dealings between buyers and sellers. Market is the characteristic phenomenon of economic life and the constitution of markets and market prices is the central problem of Economics.
EC 480 SEMINAR 5 Revision: Costs, Revenues & Profit Profit and the aims of a firm Profit is made by firms earning more from the sale of goods than the cost of producing the goods. A firm s total profit
STATE COUNCIL OF EDUCATIONAL RESEARCH &TRAINING VARUN MARG, DEFENCE COLONY, NEW DELHI Teaching- Learning Material (On the basis of weekly syllabus for the Month of July 2011) For Class XII PGT (Economics)
Perfectly Competitive Markets It is essentially a market in which there is enough competition that it doesn t make sense to identify your rivals. There are so many competitors that you cannot single out
Chapter 7 Monopoly, Oligopoly and Strategy After reading Chapter 7, MONOPOLY, OLIGOPOLY AND STRATEGY, you should be able to: Define the characteristics of Monopoly and Oligopoly, and explain why the are
1. When marginal cost equals marginal revenue product A. The firm is producing at a loss B. The firm is at break -even point C. The fmn is making the least profit D. The firm has maximum profit 2. Under
I. What is a monopoly market? Monopoly Recall that in the previous chapter on perfect competition we also defined monopoly as follows: 1. Lots of buyers only one seller 2. Single firm is the market. 3.
WSG8 7/7/03 4:34 PM Page 113 8 Market Structure: Perfect Competition and Monopoly OVERVIEW One of the most important decisions made by a manager is how to price the firm s product. If the firm is a profit
Unit 2.3.2 - erfect competition Assumptions of the model Demand curve facing the industry and the firm in perfect competition rofit-maximizing level of output and price in the short-run and long-run The
Economics 165 Winter 2002 Problem Set #2 Problem 1: Consider the monopolistic competition model. Say we are looking at sailboat producers. Each producer has fixed costs of 10 million and marginal costs
Econ 111 (04) 2nd Midterm A MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which one of the following does not occur in perfect competition? A)
Monopolistic Competition 13A CHAPTER After studying this chapter you will be able to Define and identify monopolistic competition Explain how output and price are determined in a monopolistically competitive
Final Exam Economics 101 Fall 2003 Wallace Final Exam (Version 1) Answers 1. The marginal revenue product equals A) total revenue divided by total product (output). B) marginal revenue divided by marginal
Firm Supply: Market Structure & Perfect Competition Firm Supply How does a firm decide how much to supply at a given price? This depends upon the firm s goals; technology; market environment; and competitors
Topic 8 Chapter 13 Oligopoly and Monopolistic Competition Econ 203 Topic 8 page 1 Oligopoly: How do firms behave when there are only a few competitors? These firms produce all or most of their industry
Pre-Test Chapter 22 ed17 Multiple Choice Questions 1. Refer to the above diagram. At the profit-maximizing level of output, total revenue will be: A. NM times 0M. B. 0AJE. C. 0EGC. D. 0EHB. 2. For a pure
CHAPTER 13B After studying this chapter you will be able to Oligopoly Define and identify oligopoly Explain two traditional oligopoly models Use game theory to explain how price and output are determined
Chapter 8. Competitive Firms and Markets We have learned the production function and cost function, the question now is: how much to produce such that firm can maximize his profit? To solve this question,
Chapter 8 Production Technology and Costs 8.1 Economic Costs and Economic Profit 1) Accountants include costs as part of a firm's costs, while economists include costs. A) explicit; no explicit B) implicit;
Test Yourself: Monopolistic Competition I have to keep testing myself. Eartha Kitt What is imperfect competition? 2 Imperfect competition is a market structure between the extremes of perfect competition
(Perfect) Competition (Perfect) Competition The model of perfect competition is based on the following assumptions: (Perfect) Competition The model of perfect competition is based on the following assumptions:
Unit 5.3: Perfect Competition Michael Malcolm June 18, 2011 1 Market Structures Economists usually talk about four market structures. From most competitive to least competitive, they are: perfect competition,
Perfect Competition Problem 1 (APT 93, P1) A perfectly competitive manufacturing industry is in long-run equilibrium. Energy is an important variable input in the production process and therefore the price
16 The Big Picture Chapter 13: The cost of production Now, we will look at firm s revenue But revenue depends on market structure 1. Competitive market (chapter 14) 2. Monopoly (chapter 15) 3. (this chapter)
Econ Dept, UMR Presents Perfect Competition-- --A Model of Markets Starring The Perfectly Competitive Firm Profit Maximizing Decisions In the Short Run In the Long Run Featuring An Overview of Market Structures
These notes provided by Laura Lamb are intended to complement class lectures. The notes are based on chapter 11 of Microeconomics and Behaviour 2 nd Canadian Edition by Frank and Parker (2004). Chapter
1 Unit 4: Imperfect Competition FOUR MARKET MODELS Perfect Competition Monopolistic Competition Pure Characteristics of Oligopolies: A Few Large Producers (Less than 10) Identical or Differentiated Products
The Four Conditions for Perfect Competition Perfect competition is a market structure in which a large number of firms all produce the same product. 1. Many Buyers and Sellers There are many participants
MONOPOLISTIC COMPETITION AND OLIGOPOLY I. MONOPOLISTIC COMPETITION a. CHARACTERISTICS i. RELATIVELY LARGE NUMBER OF SELLERS 1. Each firm has a relatively small percentage of market share 2. No collusion