101 lecture 16 monopolistic competition

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101 lecture 16 monopolistic competition

  1. 1. Microeconomics Lecture 16 ! Monopolistic Competition
  2. 2. Monopolistic Competition ! Brand Competition
  3. 3. Monopolistic Competition ! Brand Competition
  4. 4. The Four Market Structures
  5. 5. The Four Market Structures
  6. 6. The Four Market Structures
  7. 7. The Four Market Structures Perfect Competition
  8. 8. The Four Market Structures Perfect Competition Monopoly
  9. 9. The Four Market Structures Perfect Competition Monopoly Monopolistic Competition Brand
  10. 10. The Four Market Structures Perfect Competition Monopoly Monopolistic Competition Brand Oligopoly
  11. 11. The Four Market Structures Perfect Competition Number of Firms Monopoly Monopolistic Competition Brand Oligopoly
  12. 12. The Four Market Structures Perfect Competition Number of Firms Many Monopoly Monopolistic Competition Brand Oligopoly
  13. 13. The Four Market Structures Perfect Competition Number of Firms Monopoly Many One Monopolistic Competition Brand Oligopoly
  14. 14. The Four Market Structures Perfect Competition Number of Firms Monopoly Monopolistic Competition Brand Many One Many Oligopoly
  15. 15. The Four Market Structures Perfect Competition Number of Firms Many Monopoly Monopolistic Competition Brand Oligopoly One Many Few
  16. 16. The Four Market Structures Perfect Competition Number of Firms Type of Product Many Monopoly Monopolistic Competition Brand Oligopoly One Many Few
  17. 17. The Four Market Structures Perfect Competition Number of Firms Many Type of Product Identical Monopoly Monopolistic Competition Brand Oligopoly One Many Few
  18. 18. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Identical Unique Perfect Competition Number of Firms Type of Product
  19. 19. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Identical Unique Differentiated Perfect Competition Number of Firms Type of Product
  20. 20. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Identical Unique Differentiated Either Perfect Competition Number of Firms Type of Product
  21. 21. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Identical Unique Differentiated Either Perfect Competition Number of Firms Type of Product Ease of Entry
  22. 22. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Type of Product Identical Unique Differentiated Either Ease of Entry Easy Perfect Competition Number of Firms
  23. 23. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Type of Product Identical Unique Differentiated Either Ease of Entry Easy Blocked Perfect Competition Number of Firms
  24. 24. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Type of Product Identical Unique Differentiated Either Ease of Entry Easy Blocked Easy Perfect Competition Number of Firms
  25. 25. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Type of Product Identical Unique Differentiated Either Ease of Entry Easy Blocked Easy Hard Perfect Competition Number of Firms
  26. 26. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Type of Product Identical Unique Differentiated Either Ease of Entry Easy Blocked Easy Hard Perfect Competition Number of Firms Examples
  27. 27. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Type of Product Identical Unique Differentiated Either Ease of Entry Easy Blocked Easy Hard Examples Commodities Rice Perfect Competition Number of Firms
  28. 28. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Type of Product Identical Unique Differentiated Either Ease of Entry Easy Blocked Easy Hard Examples Commodities Rice Government Utilities Perfect Competition Number of Firms
  29. 29. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Type of Product Identical Unique Differentiated Either Ease of Entry Easy Blocked Easy Hard Government Utilities Brands Clothing Restaurants Perfect Competition Number of Firms Examples Commodities Rice
  30. 30. The Four Market Structures Monopoly Monopolistic Competition Brand Oligopoly Many One Many Few Type of Product Identical Unique Differentiated Either Ease of Entry Easy Blocked Easy Hard Government Utilities Brands Clothing Restaurants Manufacturing Cars Computers Perfect Competition Number of Firms Examples Commodities Rice
  31. 31. Number 1 2 3 4 5 Marginal Cost Total Cost Average Cost
  32. 32. Number Marginal Cost 1 5 2 4 3 6 4 9 5 16 Total Cost Average Cost
  33. 33. Number Marginal Cost Total Cost Average Cost 1 5 5 5 2 4 9 4.5 3 6 15 5 4 9 24 6 5 16 40 8
  34. 34. Number Marginal Cost Total Cost 1 40 2 60 3 90 4 160 5 250 Average Cost
  35. 35. Number Marginal Cost Total Cost Average Cost 1 40 40 40 2 20 60 30 3 30 90 30 4 70 160 40 5 90 250 50
  36. 36. Number Marginal Cost Total Cost Average Cost 1 300 2 420 3 600 4 800 5 1500
  37. 37. Number Marginal Cost Total Cost Average Cost 1 300 300 300 2 540 840 420 3 960 1800 600 4 1400 3200 800 5 4300 7500 1500
  38. 38. $ Monopoly D MR Q
  39. 39. $ Perfect Competition D = MR Q
  40. 40. Monopolistic Competition Short Run $ MR D Q
  41. 41. Monopolistic Competition Short Run $ Steep Demand MR D Q
  42. 42. Monopolistic Competition Short Run $ Steep Demand Long Run MR D Q
  43. 43. Monopolistic Competition Short Run $ Steep Demand Long Run MR D Q
  44. 44. Monopolistic Competition Short Run $ Steep Demand Long Run Demand Flattens MR D Q
  45. 45. Monopolistic Competition Short Run $ MR D Q
  46. 46. Monopolistic Competition Short Run $ MC MR D Q
  47. 47. Monopolistic Competition Short Run $ MC MR D Q
  48. 48. Monopolistic Competition Short Run $ MC MR QS D Q
  49. 49. Monopolistic Competition Short Run $ MC MR QS D Q
  50. 50. Monopolistic Competition Short Run $ MC PS MR QS D Q
  51. 51. Monopolistic Competition Short Run $ MC PS ATC MR QS D Q
  52. 52. Monopolistic Competition Short Run $ MC PS ATC MR QS D Q
  53. 53. Monopolistic Competition Short Run $ MC PS ATC MR QS D Q
  54. 54. Monopolistic Competition Short Run $ MC PS ATC MR QS D Q
  55. 55. Monopolistic Competition Short Run $ MC PS Profit ATC MR QS D Q
  56. 56. Monopolistic Competition Short Run High Price Large Quantity $ MC PS Profit ATC MR QS D Q
  57. 57. Monopolistic Competition Short Run High Price Large Quantity $ MC PS Profit Long Run ATC MR QS D Q
  58. 58. Monopolistic Competition Short Run High Price Large Quantity $ MC PS ATC MR QS D Q Long Run Demand Flattens
  59. 59. Monopolistic Competition Short Run High Price Large Quantity $ MC PS ATC MR QS D Q Long Run Demand Flattens
  60. 60. Monopolistic Competition Short Run High Price Large Quantity $ MC PS ATC MR QS D Q Long Run Demand Flattens
  61. 61. Monopolistic Competition Short Run High Price Large Quantity $ MC PS ATC MR QS D Q Long Run Demand Flattens
  62. 62. Monopolistic Competition Short Run High Price Large Quantity $ MC PS ATC MR QS D Q Long Run Demand Flattens
  63. 63. Monopolistic Competition Short Run High Price Large Quantity $ MC PS ATC MR QS D Q Long Run Demand Flattens
  64. 64. Monopolistic Competition Short Run High Price Large Quantity $ MC PS ATC MR QS D Q Long Run Demand Flattens Lower Price Lower Quantity
  65. 65. Monopolistic Competition Short Run High Price Large Quantity $ MC PS ATC PL MR QL QS D Q Long Run Demand Flattens Lower Price Lower Quantity
  66. 66. Monopolistic Competition Short Run High Price Large Quantity $ MC PS ATC PL MR QL QS D Q Long Run Demand Flattens Lower Price Lower Quantity
  67. 67. Monopolistic Competition Short Run High Price Large Quantity $ MC PS ATC PL MR QL QS D Q Long Run Demand Flattens Lower Price Lower Quantity
  68. 68. Monopolistic Competition Short Run High Price Large Quantity $ MC PS ATC PL MR QL QS D Q Long Run Demand Flattens Lower Price Lower Quantity
  69. 69. Monopolistic Competition Short Run High Price Large Quantity $ MC PS PL ATC Profit MR QL QS D Q Long Run Demand Flattens Lower Price Lower Quantity
  70. 70. Monopolistic Competition Short Run High Price Large Quantity $ MC PS PL ATC Profit MR QL QS Long Run Demand Flattens Lower Price Lower Quantity Profits disappear in the long run due to competition D Q
  71. 71. Profits D MC MR
  72. 72. Competition flattens the Demand Curve and squeezes profits. MC D MR
  73. 73. Market Competition $ Q
  74. 74. Market Competition $ Short Run Demand Short Run Marginal Revenue Q
  75. 75. Market Competition $ Short Run Demand Marginal Costs Short Run Marginal Revenue Q
  76. 76. Market Competition $ Short Run Demand Marginal Costs Short Run Marginal Revenue Q
  77. 77. Market Competition $ Short Run Demand Marginal Costs Short Run Marginal Revenue Q
  78. 78. Market Competition $ Short Run Demand Marginal Costs Short Run Marginal Revenue Q
  79. 79. Market Competition $ PSR Short Run Demand Marginal Costs Short Run Marginal Revenue QSR Q
  80. 80. Market Competition $ PSR Short Run Demand Marginal Costs Short Run Marginal Revenue QSR Q Average Total Costs
  81. 81. Market Competition $ PSR Short Run Demand Marginal Costs Short Run Marginal Revenue QSR Q Average Total Costs
  82. 82. Market Competition $ PSR Short Run Demand Marginal Costs Short Run Marginal Revenue QSR Q Average Total Costs
  83. 83. Market Competition $ PSR Short Run Demand Marginal Costs Short Run Marginal Revenue QSR Q Average Total Costs
  84. 84. Market Competition $ PSR Short Run Demand Marginal Costs Short Run Marginal Revenue QSR Q Average Total Costs
  85. 85. Market Competition $ PSR Long Run Demand Short Run Demand Marginal Costs Long Run Marginal Revenue Short Run Marginal Revenue QSR Q Average Total Costs
  86. 86. Market Competition $ PSR Long Run Demand Short Run Demand Marginal Costs Long Run Marginal Revenue Short Run Marginal Revenue QSR Q Average Total Costs
  87. 87. Market Competition $ PSR Long Run Demand Short Run Demand Marginal Costs Long Run Marginal Revenue Short Run Marginal Revenue QSR Q Average Total Costs
  88. 88. Market Competition $ PSR Long Run Demand Short Run Demand Marginal Costs Long Run Marginal Revenue Short Run Marginal Revenue QSR Q Average Total Costs
  89. 89. Market Competition $ PSR Short Run Demand Long Run Demand Marginal Costs PLR Long Run Marginal Revenue Short Run Marginal Revenue QLR QSR Q Average Total Costs
  90. 90. Quiz Name and ID# ! 1. Name the four market structures. ! 2. What does the demand curve look like in perfect competition? ! 3. Why is marginal revenue different than demand in a monopoly? ! 4. Where are profits maximized or losses minimized?

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