Determinants of market structure

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Determinants of market structure

  1. 1. Determinants of Market Structure ECONOMICS
  2. 2. 1. Government laws andpolicies In some industries, the government controls the degree of competition in the interest of the economy and the consumers.
  3. 3. 2. Technology Technology has a great impact to market structure because good or better substitutes have been developed.
  4. 4. 3. Business policies andpractices The presence of giant firms discourage the entry of new firms with little resources. Cut-throat competition
  5. 5. 4. Economic freedom In a free-enterprise economy or free- competition economy, it is the survival of the fittest. The most efficient firms remain in business.
  6. 6. Price and OutputDetermination Pure Competition -The demand curve of an individual firm under a purely competitive industry is perfectly elastic. Market Demand -The demand curve is inelastic.
  7. 7. Demand and revenue schedule of a purelycompetitive firm Price Quantity TR MR AR demanded P5 1 P5 P5 P5 5 2 10 5 5 5 3 15 5 5 5 4 20 5 5 5 5 25 5
  8. 8. Demand, marginal revenue and total revenue of a purely competitivefirm TRPriceandrevenue D = MR Quantity demanded

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