4. Profit Maximization ConditionProfit Maximization Condition
Ability to set priceAbility to set price
Market PowerMarket Power
Number of firmNumber of firm
Economic Profit in long runEconomic Profit in long run
Firm Strategy depend on rival?Firm Strategy depend on rival?
ProductProduct
MR = MCMR = MC
Price setterPrice setter
P > MCP > MC
No EntryNo Entry
11
>= 0>= 0
NONO
MonopolyMonopoly
Entry ConditionEntry Condition
Single ProductSingle Product
5. Profit Maximization ConditionProfit Maximization Condition
Ability to set priceAbility to set price
Market PowerMarket Power
Number of firmNumber of firm
Economic Profit in long runEconomic Profit in long run
Firm Strategy depend on rival?Firm Strategy depend on rival?
ProductProduct
P = MR = MCP = MR = MC
Price takerPrice taker
P = MCP = MC
Free EntryFree Entry
ManyMany
00
NONO
CompetitiveCompetitive
Entry ConditionEntry Condition
UndifferentiatedUndifferentiated
6. Profit Maximization ConditionProfit Maximization Condition
Ability to set priceAbility to set price
Market PowerMarket Power
Number of firmNumber of firm
Economic Profit in long runEconomic Profit in long run
Firm Strategy depend on rival?Firm Strategy depend on rival?
ProductProduct
MR = MCMR = MC
Price setterPrice setter
P > MCP > MC
Free EntryFree Entry
Few or ManyFew or Many
00
YESYES
MonopolisticMonopolistic
Entry ConditionEntry Condition
May be differentiatedMay be differentiated
7. Profit Maximization ConditionProfit Maximization Condition
Ability to set priceAbility to set price
Market PowerMarket Power
Number of firmNumber of firm
Economic Profit in long runEconomic Profit in long run
Firm Strategy depend on rival?Firm Strategy depend on rival?
ProductProduct
MR = MCMR = MC
Price setterPrice setter
P > MCP > MC
Limited EntryLimited Entry
FewFew
>= 0>= 0
YESYES
OligopolyOligopoly
Entry ConditionEntry Condition
May be differentiatedMay be differentiated
8. Monopolistic CompetitionMonopolistic Competition
There is free entry and exit : it is relatively easy for new
firm to entry the market with their own brands and for
existing firms to leave if their products become
unprofitable.
There is free entry and exit : it is relatively easy for new
firm to entry the market with their own brands and for
existing firms to leave if their products become
unprofitable.
Firms Compete by selling differentiated products that
are highly substitutable for one another but not perfect
substitution.
Firms Compete by selling differentiated products that
are highly substitutable for one another but not perfect
substitution.
