1. Microeconomics
Lecture 16
!
Monopolistic
Competition

2. Monopolistic
Competition
!
Brand
Competition

3. Monopolistic
Competition
!
Brand
Competition

4. The Four Market Structures

5. The Four Market Structures

6. The Four Market Structures

7. The Four Market Structures
Perfect
Competition

8. The Four Market Structures
Perfect
Competition
Monopoly

9. The Four Market Structures
Perfect
Competition
Monopoly
Monopolistic
Competition
Brand

10. The Four Market Structures
Perfect
Competition
Monopoly
Monopolistic
Competition
Brand
Oligopoly

11. The Four Market Structures
Perfect
Competition
Number of
Firms
Monopoly
Monopolistic
Competition
Brand
Oligopoly

12. The Four Market Structures
Perfect
Competition
Number of
Firms
Many
Monopoly
Monopolistic
Competition
Brand
Oligopoly

13. The Four Market Structures
Perfect
Competition
Number of
Firms
Monopoly
Many
One
Monopolistic
Competition
Brand
Oligopoly

14. The Four Market Structures
Perfect
Competition
Number of
Firms
Monopoly
Monopolistic
Competition
Brand
Many
One
Many
Oligopoly

15. The Four Market Structures
Perfect
Competition
Number of
Firms
Many
Monopoly
Monopolistic
Competition
Brand
Oligopoly
One
Many
Few

16. The Four Market Structures
Perfect
Competition
Number of
Firms
Type of
Product
Many
Monopoly
Monopolistic
Competition
Brand
Oligopoly
One
Many
Few

17. The Four Market Structures
Perfect
Competition
Number of
Firms
Many
Type of
Product
Identical
Monopoly
Monopolistic
Competition
Brand
Oligopoly
One
Many
Few

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Number
1
2
3
4
5
Marginal
Cost
Total
Cost
Average
Cost

32. Number
Marginal
Cost
1
5
2
4
3
6
4
9
5
16
Total
Cost
Average
Cost

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. Number
Marginal
Cost
Total
Cost
1
40
2
60
3
90
4
160
5
250
Average
Cost

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. Number
Marginal
Cost
Total
Cost
Average
Cost
1
300
2
420
3
600
4
800
5
1500

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. $
Monopoly
D
MR
Q

39. $
Perfect Competition
D = MR
Q

40. Monopolistic Competition
Short Run
$
MR
D
Q

41. Monopolistic Competition
Short Run
$
Steep Demand
MR
D
Q

42. Monopolistic Competition
Short Run
$
Steep Demand
Long Run
MR
D
Q

43. Monopolistic Competition
Short Run
$
Steep Demand
Long Run
MR
D
Q

44. Monopolistic Competition
Short Run
$
Steep Demand
Long Run
Demand Flattens
MR
D
Q

45. Monopolistic Competition
Short Run
$
MR
D
Q

46. Monopolistic Competition
Short Run
$
MC
MR
D
Q

47. Monopolistic Competition
Short Run
$
MC
MR
D
Q

48. Monopolistic Competition
Short Run
$
MC
MR
QS
D
Q

49. Monopolistic Competition
Short Run
$
MC
MR
QS
D
Q

50. Monopolistic Competition
Short Run
$
MC
PS
MR
QS
D
Q

51. Monopolistic Competition
Short Run
$
MC
PS
ATC
MR
QS
D
Q

52. Monopolistic Competition
Short Run
$
MC
PS
ATC
MR
QS
D
Q

53. Monopolistic Competition
Short Run
$
MC
PS
ATC
MR
QS
D
Q

54. Monopolistic Competition
Short Run
$
MC
PS
ATC
MR
QS
D
Q

55. Monopolistic Competition
Short Run
$
MC
PS
Profit
ATC
MR
QS
D
Q

56. Monopolistic Competition
Short Run
High Price
Large Quantity
$
MC
PS
Profit
ATC
MR
QS
D
Q

57. Monopolistic Competition
Short Run
High Price
Large Quantity
$
MC
PS
Profit
Long Run
ATC
MR
QS
D
Q

58. Monopolistic Competition
Short Run
High Price
Large Quantity
$
MC
PS
ATC
MR
QS
D
Q
Long Run
Demand Flattens

59. Monopolistic Competition
Short Run
High Price
Large Quantity
$
MC
PS
ATC
MR
QS
D
Q
Long Run
Demand Flattens

60. Monopolistic Competition
Short Run
High Price
Large Quantity
$
MC
PS
ATC
MR
QS
D
Q
Long Run
Demand Flattens

61. Monopolistic Competition
Short Run
High Price
Large Quantity
$
MC
PS
ATC
MR
QS
D
Q
Long Run
Demand Flattens

62. Monopolistic Competition
Short Run
High Price
Large Quantity
$
MC
PS
ATC
MR
QS
D
Q
Long Run
Demand Flattens

63. Monopolistic Competition
Short Run
High Price
Large Quantity
$
MC
PS
ATC
MR
QS
D
Q
Long Run
Demand Flattens

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. 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. 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. 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. 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. 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. 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. Profits
D
MC
MR

72. Competition flattens
the Demand Curve
and squeezes profits.
MC
D
MR

73. Market Competition
$
Q

74. Market Competition
$
Short Run
Demand
Short Run
Marginal Revenue
Q

75. Market Competition
$
Short Run
Demand
Marginal
Costs
Short Run
Marginal Revenue
Q

76. Market Competition
$
Short Run
Demand
Marginal
Costs
Short Run
Marginal Revenue
Q

77. Market Competition
$
Short Run
Demand
Marginal
Costs
Short Run
Marginal Revenue
Q

78. Market Competition
$
Short Run
Demand
Marginal
Costs
Short Run
Marginal Revenue
Q

79. Market Competition
$
PSR
Short Run
Demand
Marginal
Costs
Short Run
Marginal Revenue
QSR
Q

80. Market Competition
$
PSR
Short Run
Demand
Marginal
Costs
Short Run
Marginal Revenue
QSR
Q
Average
Total
Costs

81. Market Competition
$
PSR
Short Run
Demand
Marginal
Costs
Short Run
Marginal Revenue
QSR
Q
Average
Total
Costs

82. Market Competition
$
PSR
Short Run
Demand
Marginal
Costs
Short Run
Marginal Revenue
QSR
Q
Average
Total
Costs

83. Market Competition
$
PSR
Short Run
Demand
Marginal
Costs
Short Run
Marginal Revenue
QSR
Q
Average
Total
Costs

84. Market Competition
$
PSR
Short Run
Demand
Marginal
Costs
Short Run
Marginal Revenue
QSR
Q
Average
Total
Costs

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. 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. 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. 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. 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. 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?