This document provides an overview of market structures including monopolistic competition and oligopoly. It discusses key characteristics of each structure such as product differentiation, barriers to entry, and interdependence between firms. The document also covers concepts like profit maximization, loss minimization, long-run equilibrium, price rigidity, game theory, and Nash equilibrium which are important for understanding firm behavior under different market conditions.

1. CHAPTER 7: MARKET STRUCTURE: MONOPOLISTIC COMPETITION & OLIGOPOLY

2. 7.1 Characteristic of Monopolistic Competition 7.2 Short-run Decision: Profit Maximization 7.3 Short-run Decision: Minimizing Loss 7.4 Long-run Equilibrium 7.5 E conomic E fficiency and R esource A llocation Chapter Outline

9. Profit ??? SUPERNORMAL PROFIT

10. Loss ??? SUBNORMAL PROFIT

11. NORMAL PROFIT?

31. Payoff Matrix for Advertising Game: (A,B) Firm A Advertise Not Advertise Advertise Not Advertise Firm B Dominant Strategies A A B A A A What strategy should each firm choose? Game Theory A B A B A B 10 , 5 15 , 0 10 , 2 6 , 8

37. Firm A Advertise Not Advertise Advertise Not Advertise Firm B Nash Equilibrium A A A A B B B B What strategy should each firm choose? 10 , 5 15 , 0 20 , 2 6 , 8

42. Prisoners’ Dilemma Firm A Low Price High Price Low Price High Price Firm B What strategy should each firm choose? 2 , 2 5 , 1 3 , 3 1 , 5

51. Comparison for Market Structure Characteristics of Different Market Organizations

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