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How to draw market structure diagrams
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How to draw market structure diagrams

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Economics students find 4 easy steps to construct economics diagrams

Economics students find 4 easy steps to construct economics diagrams

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How to draw market structure diagrams How to draw market structure diagrams Presentation Transcript

  • HOW TO DRAWMARKET STRUCTURE DIAGRAMS dineshbakshi.com4 Easy steps to drawing effective market structure diagrams
  • PEREFCTCOMPETITION dineshbakshi.com
  • STEP 1DRAW THE Cost/Revenue DEMAND CURVE P D = MR = AR Output/Sales
  • STEP 2 MC MC WHEN AC IS WHEN AC ISCost/Revenue Cost/Revenue ABOVE THE AR BELOW THE AR CURVE IT IS A CURVE IT IS A LOSS AC LOSS AC P D = MR = AR P D = MR = AR Output/Sales Output/Sales PLACE THE AC & MC CURVE
  • STEP 3 MC MCCost/Revenue Cost/Revenue AC AC P D = MR = AR P D = MR = AR Q Q Output/Sales Output/Sales IDENTIFY THE PROFIT MAXIMISATION LEVEL OF OUTPUT
  • STEP 4 MC MCCost/Revenue Cost/Revenue AC AC P LOSS D = MR = AR P D = MR = AR Abnormal Profit Q Q Output/Sales Output/SalesSHADE THE REGION BETWEEN AC CURVE AR CURVE TO SHOW THE LOSS OR PROFIT
  • MONPOLY ANDMONOPOLISTICCOMPETITION dineshbakshi.com
  • Cost/RevenueThe only difference in drawingthe diagrams for perfectcompetition or any othermarket structure is the shape P D = MR = ARof the demand curve(AR)For perfect competition the Output/SalesAR=MR is perfectly elastic Cost/Revenuewhereas for other marketstructures the demand curve(AR] curve is normal i.e. slopes Pdownward to the right and theMR curve is place below the AR D =ARcurve (twice the distance] MR Output/Sales
  • STEP 1DRAW THE Cost/Revenue DEMAND CURVE D =AR MR Output/Sales
  • WHEN AC IS ABOVE THE AR STEP 2 MC WHEN AC IS MC CURVE IT IS A BELOW THE LOSS AR CURVE ITCost/Revenue Cost/Revenue IS A LOSS AC D =AR D =AR MR MR Q Output/Sales Output/Sales PLACE THE AC & MC CURVE
  • STEP 3 MC MCCost/Revenue Cost/Revenue AC D =AR D =AR MR MR Q Output/Sales Q Output/Sales IDENTIFY THE PROFIT MAXIMISATION LEVEL OF OUTPUT MC = MR
  • STEP 4 MC MCCost/Revenue Cost/Revenue LOSS AC Abnormal Profit D =AR D =AR MR MR Q Output/Sales Q Output/SalesSHADE THE REGION BETWEEN AC CURVE AR CURVE TO SHOW THE LOSS OR PROFIT
  • Congratulations !! Youhave mastered the art of drawing market structure diagrams