Econ 3 diagrams
•Download as PPTX, PDF•
1 like•2,259 views
This document covers several economic concepts: 1) It discusses the law of diminishing returns and how marginal productivity declines with additional labor. 2) It explains monopoly equilibrium where a firm produces at the quantity where marginal cost equals marginal revenue. 3) Monopolies are productively and allocatively inefficient as they produce too little output and charge too high a price.
Report
Share
Report
Share
Recommended
Imprefect
A market can be defined as a group of firms willing and able to sell a similar product or service to the same potential buyers.
Imperfect competition covers all situations where there is neither pure competition nor pure monopoly.
Perfect competition and pure monopoly are very unlikely to be found in the real world.
In the real world, it is the imperfect competition lying between perfect competition and pure monopoly.
The fundamental distinguishing characteristic of imperfect competition is that average revenue curve slopes downwards throughout its length, but it slopes downwards at different rates in different categories of imperfect competition.
Monopoly refers to the market situation where there is a
Single seller selling a product which has no close substitutes.
Monopolies are characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the existence of a high monopoly price well above the firm's marginal cost that leads to a high monopoly profit
The word “oligopoly” comes from the Greek “oligos” meaning "little or small” and “polein” meaning “to sell.” When “oligos” is used in the plural, it means “few” ,few firms or few sellers.
DEFINATION:
Oligopoly is that form of market where there are few firms and there is natural interdependence among the firms regarding price and output policy.
Monopolistic Equilibrium in short and long run
In the short run, a monopolistically competitive firm will produce at the quantity where marginal cost equals marginal revenue to maximize profits. This occurs at a price above average cost, resulting in abnormal profits. In the long run, entry of new firms shifts individual demand curves down and costs curves up, eliminating abnormal profits so firms only earn normal profits where price equals average cost, establishing equilibrium.
Perfect Competition in the Long Run
This document discusses perfect competition in the long run. It provides two scenarios to analyze how a perfectly competitive firm, Joe the catfish farmer, would respond to a decline in prices. If prices fell to $71/unit, Joe should shut down his business as it would be cheaper than producing at a loss. However, if prices only fell to $81/unit, Joe should continue operating in the short run to minimize his losses until prices potentially increase. The document also discusses how, in perfect competition, the constant entry and exit of firms in response to profits and losses drives prices toward the lowest point on the average total cost curve in the long run.
Perfect competition
This document summarizes the concepts of perfect competition in the short run and long run. It discusses how a perfectly competitive firm determines profit-maximizing output by producing at the quantity where marginal revenue equals marginal cost. In the short run, firms can increase or decrease output but cannot exit the industry. In long run equilibrium, firms earn zero economic profit and the industry supply curve is determined by the minimum average cost of production as the number of firms adjusts.
Perfect competition
1) The document discusses the concept of perfect competition and firm equilibrium under conditions of perfect competition.
2) A key aspect of perfect competition is that there are many small producers and consumers in the market buying and selling homogeneous products, and all participants have perfect information. The market price is determined by supply and demand forces outside the control of individual firms.
3) For a firm to be in equilibrium under perfect competition, its marginal cost must equal its marginal revenue (which is equal to the market price). At this equilibrium point, the firm maximizes its profits.
4) The document contrasts the short run and long run equilibriums for firms under perfect competition and how super normal profits, normal profits
Chap5
This chapter discusses perfect competition and profit maximization in competitive markets. It contains the following key points:
1. Under perfect competition, there are many small firms and buyers/sellers, homogeneous products, free entry and exit, and perfect information. Firms are price takers and maximize profits by producing where marginal revenue equals marginal cost.
2. In the short run, firms will shut down if price falls below average variable cost or operate at a loss if price is between average variable and average total cost. In the long run, zero economic profits are achieved through free entry and exit of firms.
3. External changes like shifting demand curves or new technology can impact market equilibrium price and quantity in both the
Chapter 6: Competitive, Monopolistic, and Monopolistically Competitive Markets
Chapter 6: Competitive, Monopolistic, and Monopolistically Competitive MarketsFirdaus Fitri Zainal Abidin
This document provides an overview of different market structures:
- Perfect competition is characterized by many small firms, homogeneous products, perfect information and free entry/exit. Firms are price-takers and earn zero profits in the long run.
- Monopolies have a single firm, barriers to entry, downward sloping demand and set price above marginal cost to earn profits.
- Monopolistic competition has many small firms, differentiated products, free entry/exit. In the short run firms earn profits but in the long run entry drives profits to zero as under perfect competition.Equilibrium of Industry
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Afridi Hasan
Shahidul Islam
Aminul Islam Milon
Md. Maznur Rahman
Abdullah Al Mamon
Recommended
Imprefect
A market can be defined as a group of firms willing and able to sell a similar product or service to the same potential buyers.
Imperfect competition covers all situations where there is neither pure competition nor pure monopoly.
Perfect competition and pure monopoly are very unlikely to be found in the real world.
In the real world, it is the imperfect competition lying between perfect competition and pure monopoly.
The fundamental distinguishing characteristic of imperfect competition is that average revenue curve slopes downwards throughout its length, but it slopes downwards at different rates in different categories of imperfect competition.
Monopoly refers to the market situation where there is a
Single seller selling a product which has no close substitutes.
Monopolies are characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the existence of a high monopoly price well above the firm's marginal cost that leads to a high monopoly profit
The word “oligopoly” comes from the Greek “oligos” meaning "little or small” and “polein” meaning “to sell.” When “oligos” is used in the plural, it means “few” ,few firms or few sellers.
DEFINATION:
Oligopoly is that form of market where there are few firms and there is natural interdependence among the firms regarding price and output policy.
Monopolistic Equilibrium in short and long run
In the short run, a monopolistically competitive firm will produce at the quantity where marginal cost equals marginal revenue to maximize profits. This occurs at a price above average cost, resulting in abnormal profits. In the long run, entry of new firms shifts individual demand curves down and costs curves up, eliminating abnormal profits so firms only earn normal profits where price equals average cost, establishing equilibrium.
Perfect Competition in the Long Run
This document discusses perfect competition in the long run. It provides two scenarios to analyze how a perfectly competitive firm, Joe the catfish farmer, would respond to a decline in prices. If prices fell to $71/unit, Joe should shut down his business as it would be cheaper than producing at a loss. However, if prices only fell to $81/unit, Joe should continue operating in the short run to minimize his losses until prices potentially increase. The document also discusses how, in perfect competition, the constant entry and exit of firms in response to profits and losses drives prices toward the lowest point on the average total cost curve in the long run.
Perfect competition
This document summarizes the concepts of perfect competition in the short run and long run. It discusses how a perfectly competitive firm determines profit-maximizing output by producing at the quantity where marginal revenue equals marginal cost. In the short run, firms can increase or decrease output but cannot exit the industry. In long run equilibrium, firms earn zero economic profit and the industry supply curve is determined by the minimum average cost of production as the number of firms adjusts.
Perfect competition
1) The document discusses the concept of perfect competition and firm equilibrium under conditions of perfect competition.
2) A key aspect of perfect competition is that there are many small producers and consumers in the market buying and selling homogeneous products, and all participants have perfect information. The market price is determined by supply and demand forces outside the control of individual firms.
3) For a firm to be in equilibrium under perfect competition, its marginal cost must equal its marginal revenue (which is equal to the market price). At this equilibrium point, the firm maximizes its profits.
4) The document contrasts the short run and long run equilibriums for firms under perfect competition and how super normal profits, normal profits
Chap5
This chapter discusses perfect competition and profit maximization in competitive markets. It contains the following key points:
1. Under perfect competition, there are many small firms and buyers/sellers, homogeneous products, free entry and exit, and perfect information. Firms are price takers and maximize profits by producing where marginal revenue equals marginal cost.
2. In the short run, firms will shut down if price falls below average variable cost or operate at a loss if price is between average variable and average total cost. In the long run, zero economic profits are achieved through free entry and exit of firms.
3. External changes like shifting demand curves or new technology can impact market equilibrium price and quantity in both the
Chapter 6: Competitive, Monopolistic, and Monopolistically Competitive Markets
Chapter 6: Competitive, Monopolistic, and Monopolistically Competitive MarketsFirdaus Fitri Zainal Abidin
This document provides an overview of different market structures:
- Perfect competition is characterized by many small firms, homogeneous products, perfect information and free entry/exit. Firms are price-takers and earn zero profits in the long run.
- Monopolies have a single firm, barriers to entry, downward sloping demand and set price above marginal cost to earn profits.
- Monopolistic competition has many small firms, differentiated products, free entry/exit. In the short run firms earn profits but in the long run entry drives profits to zero as under perfect competition.Equilibrium of Industry
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Afridi Hasan
Shahidul Islam
Aminul Islam Milon
Md. Maznur Rahman
Abdullah Al Mamon
Perfect competition iimm
This document discusses market structures, specifically perfect competition. It defines key features of perfect competition including a large number of buyers and sellers, homogeneous products, free entry and exit, and perfect information. Under perfect competition, firms are price takers and maximize profits by producing where marginal revenue equals marginal cost. In the long run, no firms earn supernormal profits and all firms earn only normal profits as entry and exit leads to equilibrium.
Equilibrium of Firm Under Perfect Competition
The ppt incorporates lots of animations for clear explanation on graphs and curves, it's better to download it first and then surely you will be cherished with it
Perfect Competition Lecture Notes (Economics)
FellowBuddy.com is an innovative platform that brings students together to share notes, exam papers, study guides, project reports and presentation for upcoming exams.
We connect Students who have an understanding of course material with Students who need help.
Benefits:-
# Students can catch up on notes they missed because of an absence.
# Underachievers can find peer developed notes that break down lecture and study material in a way that they can understand
# Students can earn better grades, save time and study effectively
Our Vision & Mission – Simplifying Students Life
Our Belief – “The great breakthrough in your life comes when you realize it, that you can learn anything you need to learn; to accomplish any goal that you have set for yourself. This means there are no limits on what you can be, have or do.”
Like Us - https://www.facebook.com/FellowBuddycom
Perfect competition in a Monopolistic Market
A firm’s pricing market power depends on its competitive environment.
In perfectly competitive markets, firms have no market power. They are “price takers.” They make decisions based on the market price, which they are powerless to influence.
In markets that are not perfectly competitive (which describes most markets), most firms have some degree of market power.
Strategy in the absence of market power
Firms cannot influence price and, because products are not unique, they cannot influence demand by advertising or product differentiation.
Managers in this environment maximize profit by minimizing cost, through the efficient use of resources, and by determining the quantity to produce.
https://azpapers.com/imperfect-competition-market-analysis/
Perfect competition
1) A perfect market is characterized by many small producers and consumers, identical products, free entry and exit, and perfect information.
2) In a perfect market, firms are price takers and have no control over the market price. They will produce at the quantity where marginal revenue equals marginal cost to maximize profits.
3) Firms can earn profits, break even, or minimize losses depending on whether the market price is above, equal to, or below their average total cost. Economic profits are not sustained long-term in a perfect market.
Perfect competition
Perfect competition is a market structure with many small firms, homogeneous products, perfect information and free entry and exit. In the short run, firms maximize profits where marginal cost (MC) equals marginal revenue (MR). Abnormal profits attract new firms, lowering prices to normal profits when MC equals average cost (AC). Allocative efficiency occurs where MC equals average revenue (AR). In the long run, productive, allocative and profit maximizing efficiencies are achieved at the same output level.
Session 10 firms in competitive markets
A perfectly competitive market has many small firms, identical products, and free entry and exit. Each firm is a price taker and maximizes profits by producing where marginal revenue equals marginal cost. In the short run, firms will shut down if price is below average variable cost, while in the long run firms will exit if price is below average total cost. Market supply results from the aggregation of individual firm supplies. In the long run, entry and exit of firms drives the market to equilibrium with zero profits.
Economics Curve Diagrams New 1
The document discusses the short run and long run equilibrium of firms under different market structures. It covers the equilibrium concepts of perfect competition including supernormal profit, normal profit, and losses. It also discusses monopoly equilibrium, showing marginal revenue, average revenue, marginal cost and average cost. Finally, it mentions price discrimination equilibrium using the example of dumping where a firm charges different prices in different markets.
Bec doms ppt on perfect competition
In a perfectly competitive market, there are many small firms producing identical goods with easy entry and exit. Each firm is a price taker, unable to influence the market price. In the short run, a firm will operate at the quantity where marginal revenue equals marginal cost to maximize profits. This can result in either economic profits or losses. In the long run, if there are economic profits, more firms will enter the market, driving the price down until profits reach zero. If there are economic losses, firms will exit until the price rises and losses become zero, reaching long run equilibrium with normal profits.
Perfect competition
1. The document discusses the concept of perfect competition, which is an ideal market structure with no barriers to entry, homogeneous products, perfect information, and price-taking firms and consumers.
2. Under perfect competition, firms seek to maximize profits by producing at the level where marginal revenue equals marginal cost, and marginal cost is rising. In the long run, no firms earn abnormal profits as free entry and exit drives prices down to minimum average cost.
3. The perfect competition model serves as a benchmark for analyzing market imperfections, as it achieves an efficient allocation of resources where price equals minimum average cost and marginal cost equals marginal benefit to consumers.
Perfect Competition
Perfect Competition describes a market structure with many small firms producing identical products, with easy entry and exit from the market. Under Perfect Competition, firms aim to maximize profits by producing where their marginal cost equals marginal revenue. At this point of equilibrium, firms can earn normal profits but cannot earn abnormal profits in the long run due to competition. The key characteristics of Perfect Competition are that it is very efficient, always reaches equilibrium prices and quantities, and provides consumers with the best prices.
Arash 6
The document discusses different market structures including perfect competition, monopoly, and oligopoly. It provides details on the characteristics of a perfectly competitive market including numerous small firms, homogeneous products, perfect information, and free entry and exit. The profit-maximizing firm in perfect competition will produce where price equals marginal cost. In the long-run, normal profits are earned as entry and exit of firms occurs in response to above- or below-normal profits. Monopoly is defined by a single seller with no close substitutes and downward sloping demand.
Market Perfect Competition_MBA_Parakramesh Jaroli
This document provides an overview of different market structures, with a focus on perfect competition. It defines key concepts related to revenue, costs, and profit maximization for firms in competitive markets. Perfect competition is characterized by many small firms, homogeneous products, free entry and exit, and perfect information. Under perfect competition, firms are price takers and marginal revenue equals price. Equilibrium occurs where marginal cost equals marginal revenue. The document also discusses long-run equilibrium and how perfect competition leads to allocative efficiency.
14 firms competitive
In a perfectly competitive market:
- Many buyers and sellers exist
- Firms are price takers and the actions of any single firm do not impact the market price
- In the long run, firms will enter or exit the market until price equals minimum average total cost and economic profit is zero.
The Firms and the Competitive Market
This presentation basically tells how the firm makes decisions in a competitive market. To make concepts here more understable, I have prepared graphs and mathematical equations.
Micro
This document summarizes key concepts related to monopoly, including:
1) A monopoly firm is the sole seller of a product without close substitutes and can set price. It produces where marginal revenue equals marginal cost, resulting in lower output and higher prices than perfect competition.
2) Monopoly power can be measured by the Lerner Index, which is the excess of price over marginal cost as a proportion of price. Monopoly power is greater when demand is less elastic.
3) A monopoly faces a downward sloping demand curve. Changes in costs, demand, or taxes affect price and quantity in complex ways depending on the elasticity of demand.
Firms in competitive market
Firms in competitive markets are price takers and maximize profits by producing where marginal revenue equals marginal cost. In the short run, a competitive firm's supply curve is its marginal cost curve. In the long run, firms will enter or exit the market to earn normal profits when price equals average total cost. If demand increases in the short run, price and quantity rise as firms earn profits. In the long run, entry of new firms causes supply to increase, price and profits to fall back to normal.
Retailing in pricing
This document discusses various retail pricing strategies. It explains that retailers must consider their costs of goods and operating expenses to determine the right price. There are several popular pricing strategies retailers can adopt, including competitive pricing, discount pricing, full price pricing, psychological pricing, vendor pricing, and multiple pricing. Competitive pricing involves pricing below, at, or above competitors. Discount pricing focuses on high sales volumes with low margins. Full price retailers target exclusive markets less sensitive to price. Psychological pricing uses techniques like odd-ending prices. Vendor pricing follows manufacturers' suggested retail prices. Multiple pricing offers deals like buy two get one free.
markets
The document defines and discusses different types of markets. A market brings buyers and sellers into contact and enables an exchange to take place. Markets can be classified by area, nature of transactions, volume of business, time period, and status of sellers. Competition in a market depends on substitutability, interdependence, and ease of entry. Equilibrium price is where quantity demanded equals quantity supplied. Under perfect competition, firms are price takers and quantity supplied equals marginal cost. Monopolies have a single seller and influence price. Monopolistic competition involves differentiated products, while oligopolies have few dominant sellers.
Market structure
The market is made up of buyers and sellers who conduct exchange transactions. Markets can be classified based on area, the nature of transactions, volume, time period, and level of competition. Under perfect competition, there are many small firms and homogeneous products. Individual firms are price takers and maximize profits where marginal revenue equals marginal cost. Monopolies have single firms and differentiated products, allowing them to be price makers that also set output at the point where marginal revenue equals marginal cost. Oligopolies feature a few interdependent firms, and pricing may involve price leadership or tacit collusion to coordinate prices.
8350636.ppt business
Monopolistic competition is characterized by many firms producing differentiated products. While firms act independently, they still face downward sloping demand curves and engage in non-price competition like advertising. In the short run, firms can earn abnormal profits or losses, but in the long run free entry and exit will cause demand curves to shift until all firms earn only normal profits and operate at an inefficient scale.
monopoly (1).pdf
The document discusses different types of monopoly profits and pricing strategies. It defines normal profits as occurring when revenue equals costs. Super-normal profits are earned when costs are less than revenue. The monopolist aims to produce where marginal revenue equals marginal cost to maximize profits, earning profits represented by the area between the average cost and demand curves. Price discrimination allows a monopolist to charge different prices to different groups to enhance profits by more closely aligning prices with what different consumers are willing to pay.
More Related Content
What's hot
Perfect competition iimm
This document discusses market structures, specifically perfect competition. It defines key features of perfect competition including a large number of buyers and sellers, homogeneous products, free entry and exit, and perfect information. Under perfect competition, firms are price takers and maximize profits by producing where marginal revenue equals marginal cost. In the long run, no firms earn supernormal profits and all firms earn only normal profits as entry and exit leads to equilibrium.
Equilibrium of Firm Under Perfect Competition
The ppt incorporates lots of animations for clear explanation on graphs and curves, it's better to download it first and then surely you will be cherished with it
Perfect Competition Lecture Notes (Economics)
FellowBuddy.com is an innovative platform that brings students together to share notes, exam papers, study guides, project reports and presentation for upcoming exams.
We connect Students who have an understanding of course material with Students who need help.
Benefits:-
# Students can catch up on notes they missed because of an absence.
# Underachievers can find peer developed notes that break down lecture and study material in a way that they can understand
# Students can earn better grades, save time and study effectively
Our Vision & Mission – Simplifying Students Life
Our Belief – “The great breakthrough in your life comes when you realize it, that you can learn anything you need to learn; to accomplish any goal that you have set for yourself. This means there are no limits on what you can be, have or do.”
Like Us - https://www.facebook.com/FellowBuddycom
Perfect competition in a Monopolistic Market
A firm’s pricing market power depends on its competitive environment.
In perfectly competitive markets, firms have no market power. They are “price takers.” They make decisions based on the market price, which they are powerless to influence.
In markets that are not perfectly competitive (which describes most markets), most firms have some degree of market power.
Strategy in the absence of market power
Firms cannot influence price and, because products are not unique, they cannot influence demand by advertising or product differentiation.
Managers in this environment maximize profit by minimizing cost, through the efficient use of resources, and by determining the quantity to produce.
https://azpapers.com/imperfect-competition-market-analysis/
Perfect competition
1) A perfect market is characterized by many small producers and consumers, identical products, free entry and exit, and perfect information.
2) In a perfect market, firms are price takers and have no control over the market price. They will produce at the quantity where marginal revenue equals marginal cost to maximize profits.
3) Firms can earn profits, break even, or minimize losses depending on whether the market price is above, equal to, or below their average total cost. Economic profits are not sustained long-term in a perfect market.
Perfect competition
Perfect competition is a market structure with many small firms, homogeneous products, perfect information and free entry and exit. In the short run, firms maximize profits where marginal cost (MC) equals marginal revenue (MR). Abnormal profits attract new firms, lowering prices to normal profits when MC equals average cost (AC). Allocative efficiency occurs where MC equals average revenue (AR). In the long run, productive, allocative and profit maximizing efficiencies are achieved at the same output level.
Session 10 firms in competitive markets
A perfectly competitive market has many small firms, identical products, and free entry and exit. Each firm is a price taker and maximizes profits by producing where marginal revenue equals marginal cost. In the short run, firms will shut down if price is below average variable cost, while in the long run firms will exit if price is below average total cost. Market supply results from the aggregation of individual firm supplies. In the long run, entry and exit of firms drives the market to equilibrium with zero profits.
Economics Curve Diagrams New 1
The document discusses the short run and long run equilibrium of firms under different market structures. It covers the equilibrium concepts of perfect competition including supernormal profit, normal profit, and losses. It also discusses monopoly equilibrium, showing marginal revenue, average revenue, marginal cost and average cost. Finally, it mentions price discrimination equilibrium using the example of dumping where a firm charges different prices in different markets.
Bec doms ppt on perfect competition
In a perfectly competitive market, there are many small firms producing identical goods with easy entry and exit. Each firm is a price taker, unable to influence the market price. In the short run, a firm will operate at the quantity where marginal revenue equals marginal cost to maximize profits. This can result in either economic profits or losses. In the long run, if there are economic profits, more firms will enter the market, driving the price down until profits reach zero. If there are economic losses, firms will exit until the price rises and losses become zero, reaching long run equilibrium with normal profits.
Perfect competition
1. The document discusses the concept of perfect competition, which is an ideal market structure with no barriers to entry, homogeneous products, perfect information, and price-taking firms and consumers.
2. Under perfect competition, firms seek to maximize profits by producing at the level where marginal revenue equals marginal cost, and marginal cost is rising. In the long run, no firms earn abnormal profits as free entry and exit drives prices down to minimum average cost.
3. The perfect competition model serves as a benchmark for analyzing market imperfections, as it achieves an efficient allocation of resources where price equals minimum average cost and marginal cost equals marginal benefit to consumers.
Perfect Competition
Perfect Competition describes a market structure with many small firms producing identical products, with easy entry and exit from the market. Under Perfect Competition, firms aim to maximize profits by producing where their marginal cost equals marginal revenue. At this point of equilibrium, firms can earn normal profits but cannot earn abnormal profits in the long run due to competition. The key characteristics of Perfect Competition are that it is very efficient, always reaches equilibrium prices and quantities, and provides consumers with the best prices.
Arash 6
The document discusses different market structures including perfect competition, monopoly, and oligopoly. It provides details on the characteristics of a perfectly competitive market including numerous small firms, homogeneous products, perfect information, and free entry and exit. The profit-maximizing firm in perfect competition will produce where price equals marginal cost. In the long-run, normal profits are earned as entry and exit of firms occurs in response to above- or below-normal profits. Monopoly is defined by a single seller with no close substitutes and downward sloping demand.
Market Perfect Competition_MBA_Parakramesh Jaroli
This document provides an overview of different market structures, with a focus on perfect competition. It defines key concepts related to revenue, costs, and profit maximization for firms in competitive markets. Perfect competition is characterized by many small firms, homogeneous products, free entry and exit, and perfect information. Under perfect competition, firms are price takers and marginal revenue equals price. Equilibrium occurs where marginal cost equals marginal revenue. The document also discusses long-run equilibrium and how perfect competition leads to allocative efficiency.
14 firms competitive
In a perfectly competitive market:
- Many buyers and sellers exist
- Firms are price takers and the actions of any single firm do not impact the market price
- In the long run, firms will enter or exit the market until price equals minimum average total cost and economic profit is zero.
The Firms and the Competitive Market
This presentation basically tells how the firm makes decisions in a competitive market. To make concepts here more understable, I have prepared graphs and mathematical equations.
Micro
This document summarizes key concepts related to monopoly, including:
1) A monopoly firm is the sole seller of a product without close substitutes and can set price. It produces where marginal revenue equals marginal cost, resulting in lower output and higher prices than perfect competition.
2) Monopoly power can be measured by the Lerner Index, which is the excess of price over marginal cost as a proportion of price. Monopoly power is greater when demand is less elastic.
3) A monopoly faces a downward sloping demand curve. Changes in costs, demand, or taxes affect price and quantity in complex ways depending on the elasticity of demand.
Firms in competitive market
Firms in competitive markets are price takers and maximize profits by producing where marginal revenue equals marginal cost. In the short run, a competitive firm's supply curve is its marginal cost curve. In the long run, firms will enter or exit the market to earn normal profits when price equals average total cost. If demand increases in the short run, price and quantity rise as firms earn profits. In the long run, entry of new firms causes supply to increase, price and profits to fall back to normal.
Retailing in pricing
This document discusses various retail pricing strategies. It explains that retailers must consider their costs of goods and operating expenses to determine the right price. There are several popular pricing strategies retailers can adopt, including competitive pricing, discount pricing, full price pricing, psychological pricing, vendor pricing, and multiple pricing. Competitive pricing involves pricing below, at, or above competitors. Discount pricing focuses on high sales volumes with low margins. Full price retailers target exclusive markets less sensitive to price. Psychological pricing uses techniques like odd-ending prices. Vendor pricing follows manufacturers' suggested retail prices. Multiple pricing offers deals like buy two get one free.
What's hot (18)
Similar to Econ 3 diagrams
markets
The document defines and discusses different types of markets. A market brings buyers and sellers into contact and enables an exchange to take place. Markets can be classified by area, nature of transactions, volume of business, time period, and status of sellers. Competition in a market depends on substitutability, interdependence, and ease of entry. Equilibrium price is where quantity demanded equals quantity supplied. Under perfect competition, firms are price takers and quantity supplied equals marginal cost. Monopolies have a single seller and influence price. Monopolistic competition involves differentiated products, while oligopolies have few dominant sellers.
Market structure
The market is made up of buyers and sellers who conduct exchange transactions. Markets can be classified based on area, the nature of transactions, volume, time period, and level of competition. Under perfect competition, there are many small firms and homogeneous products. Individual firms are price takers and maximize profits where marginal revenue equals marginal cost. Monopolies have single firms and differentiated products, allowing them to be price makers that also set output at the point where marginal revenue equals marginal cost. Oligopolies feature a few interdependent firms, and pricing may involve price leadership or tacit collusion to coordinate prices.
8350636.ppt business
Monopolistic competition is characterized by many firms producing differentiated products. While firms act independently, they still face downward sloping demand curves and engage in non-price competition like advertising. In the short run, firms can earn abnormal profits or losses, but in the long run free entry and exit will cause demand curves to shift until all firms earn only normal profits and operate at an inefficient scale.
monopoly (1).pdf
The document discusses different types of monopoly profits and pricing strategies. It defines normal profits as occurring when revenue equals costs. Super-normal profits are earned when costs are less than revenue. The monopolist aims to produce where marginal revenue equals marginal cost to maximize profits, earning profits represented by the area between the average cost and demand curves. Price discrimination allows a monopolist to charge different prices to different groups to enhance profits by more closely aligning prices with what different consumers are willing to pay.
Market Forms - Perfect competition, Monopoly, Monopsony, Oligopoly.pptx
The document discusses different market forms including perfect competition, monopoly, monopolistic competition, and oligopoly. It describes their key features such as number of buyers/sellers, barriers to entry, product differentiation, and interdependence between firms. The document also defines monopsony and provides an employment example. Furthermore, it explains the equilibrium conditions for a perfectly competitive firm in the short run in terms of marginal cost equaling marginal revenue and the shutdown point where average costs exceed average revenue.
Principles of Microeconomics Chapter Seven
This document provides an overview of key concepts related to perfect competition. It discusses the criteria for perfect competition, including many firms producing identical goods, free entry and exit into the market, and all parties having full information. Firms under perfect competition are price takers and maximize profits by producing where marginal revenue equals marginal cost. In the long run, perfectly competitive markets achieve both productive and allocative efficiency.
Unit 3 Price and Output Detrmination
Unit - 3 Price & Output Determination discusses the key concepts of market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It examines revenue, profit, and price determination in both the short run and long run for perfect competition and monopoly. Monopolistic competition and oligopolies are also summarized, including how the kinked demand curve model explains price rigidity in oligopolies.
Unit 3 mkt
This document summarizes different market structures:
1. Perfect competition has many small firms, homogeneous products, free entry and exit, and firms are price takers. Equilibrium for firms is where marginal cost equals marginal revenue.
2. Monopoly has a single seller. It is a price maker and can set prices. Equilibrium is where marginal revenue equals marginal cost.
3. Monopolistic competition is like perfect competition but products are differentiated. Firms are price makers but have some competition. Equilibrium profits are normal in long run.
4. Oligopoly has few dominant firms. They are interdependent and can engage in collusion or price leadership.
Microeconomics Monopoly
1) The document discusses various concepts in microeconomics including monopoly, monopolistic competition, and price discrimination.
2) Under monopoly, a profit-maximizing firm will produce the quantity where marginal revenue equals marginal cost. This maximizes profits.
3) Under monopolistic competition, firms produce differentiated products and free entry leads to zero economic profits in the long-run. However, price still exceeds marginal cost, resulting in some deadweight loss.
4) Price discrimination allows firms to charge different prices to different customers. Perfect first-degree price discrimination involves charging each customer their reservation price. This maximizes a firm's profits.
1monopolistic competition
Here are the steps to solve this problem:
1) Take the derivative of total cost (TC') = 400 - 40Q + 3Q^2
2) Set TC' equal to marginal revenue (MR) and solve for Q:
TC' = MR
400 - 40Q + 3Q^2 = 309.75 - Q
3Q^2 - 39Q + 91.25 = 0
3) Solve the quadratic formula to find the optimal quantity:
Q* = 13
4) Plug Q* back into the demand equation to find price:
P* = 309.75 - 13 = 296.75
5) Calculate total cost at Q* and subtract from total revenue to find profit:
Perfect competition
Perfect competition requires: firms are price takers, many sellers/buyers, free entry/exit, identical products, complete information. In short-run, individual firms maximize profits where marginal cost (MC) equals marginal revenue (MR). Market supply is the sum of individual firm MC curves. In long-run, zero economic profits are achieved as new entry drives prices down until MC equals average costs.
Price and Output Determination.pptx
This document discusses different market structures and concepts related to price and output determination. It begins by defining key terms like market, revenue, profit, and price determination under perfect competition in both the short and long run. It then discusses monopoly markets in the short run and monopolistic competition. Monopolistic competition allows for some product differentiation and involves both price and non-price competition. The document notes firms under monopolistic competition will earn only normal profits in the long run as new firms enter if super normal profits exist or exit if sub normal profits exist. It concludes by defining oligopoly as a market with a few large firms making interdependent decisions.
Perfect competition & Monopoly
This document summarizes and compares the revenue curves under perfect competition and monopoly. Under perfect competition, firms are price takers and the average revenue (AR) curve is flat, as additional units can be sold at the same price. Therefore, the marginal revenue (MR) curve coincides with the AR curve. Under monopoly, there is a single seller who can influence price. Both the AR and MR curves slope downward, as the monopolist must lower prices to sell additional output. The AR curve under monopoly is a rectangular hyperbola, meaning total revenue remains constant at different price points.
11. Managerial Economics Revenue curves.pptx
This document provides an overview of managerial economics concepts including revenue, costs, profits, and market structures. It discusses how economists and accountants measure costs and profits differently. Firms exist to maximize profits by producing where marginal revenue equals marginal cost. The equilibrium level depends on the relationship between average cost, marginal cost, and marginal revenue curves. Imperfect market structures like monopoly and monopolistic competition are also introduced.
Imperfect competition.pptx
Imperfect competition is an economic concept used to describe marketplace conditions that render a market less than perfectly competitive, creating market inefficiencies that result in losses of economic value.
In the real world, markets are nearly always in a condition of imperfect competition to some extent. However, the term is typically only used to describe markets where the level of competition among sellers is substantially below ideal conditions.A situation of imperfect competition exists whenever one of the fundamental characteristics of perfect competition is missing. When there is perfect competition in a market, prices are controlled primarily by the ordinary economic factors of supply and demand.
Notably, the stock market may be viewed as a continually imperfect market because not all investors have ready access to the same level of information regarding potential investments.
Imperfect competition commonly exists when a market structure is in the form of monopolies, duopolies, oligopolies, or monopsony (very rare)
Market structures that effectively render competition imperfect are most often characterized by a lack of competitive suppliers. Imperfect competition often exists as a result of extremely high barriers to entry for new suppliers. For example, the airline industry has high barriers to entry due to the extremely high cost of aircraft.
The most extreme condition of imperfect competition exists when the market for a particular good or service is a monopoly, one in which there is a sole supplier. A supplier that has a monopoly on the provision of a good or service essentially has complete control over prices.
Because it has no competition from other suppliers, the sole supplier can essentially set the price of its goods or services at any level it desires. Monopolies often charge prices that provide them with significantly higher profit margins than most companies operate with.
A duopoly is a market structure in which there are only two suppliers. Although duopolies are somewhat more competitive than monopolies, the level of competition is still far from perfect, as the two suppliers still have significant control of marketplace prices.
An example of a duopoly exists in the United Kingdom’s detergent market, where Procter & Gamble (NYSE: PG) and Unilever (NYSE: UL) are virtually the only suppliers. The two suppliers in a duopoly often collude in price setting.
Oligopolies are much more common than either monopolies or duopolies. In an oligopoly, there are several – but a small, limited number – of suppliers. The market for cell phone service in the United States is an example of an oligopoly, as it is essentially controlled by just a handful of suppliers. The small number of suppliers, which limits buying choices for consumers, provides the suppliers with substantial, although not complete, control over pricing.
A rare form of imperfect competition is monopsony. A monopsony is a single buyer, rather than any supplier.
Market structure and its features
The document discusses market structure under perfect competition. It begins by defining key terms like market, market structure, and the two types of market structures - perfect competition and imperfect competition.
Under perfect competition, the market has several characteristics - homogeneous products, free entry and exit of firms, perfect information, and firms being price takers. The demand curve for an individual firm is horizontal, as it is a price taker. Equilibrium occurs where MR=MC and firms earn only normal profits in the long run. Changes in demand or supply can shift the equilibrium.
The document then discusses monopoly as an example of imperfect competition. Under monopoly there is a single seller, barriers to entry, no close substitutes, and
Basics of business monopoly and competitive markets
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, oligopoly, and duopoly. It provides characteristics and diagrams to analyze each structure. A monopolistic market is described as having many firms differentiating similar products, with relatively easy entry and exit into the industry and imperfect consumer and producer knowledge. Firms in monopolistic competition can earn abnormal profits in the short run but normal profits in the long run as entry of new firms causes prices to fall.
PROFIT MAXIMISATION using MR, MC and profit maximisation.pptx
The document discusses profit maximization and competitive supply in perfectly competitive markets. It can be summarized as follows:
1. Perfectly competitive markets are characterized by price-taking firms, homogeneous products, and free entry and exit. Firms seek to maximize profits by producing where marginal revenue equals marginal cost.
2. The competitive firm's short-run supply curve slopes upward as higher prices induce firms to increase production. In the long-run, firms adjust all inputs including plant size to minimize average costs and maximize profits.
3. Market supply is the sum of individual firm supplies. It has a kinked shape and is upward sloping in the short-run. In the long-run, firms enter
Monopoly and Price Determination
This document discusses monopoly and price determination under monopoly. It defines monopoly as a market situation with a single seller and no close substitutes. A monopoly firm is a price maker that can influence the price of its product. The document examines how a monopoly firm determines price and equilibrium in the short and long run through total revenue and cost analysis and marginal revenue and marginal cost analysis. It maximizes profits by producing where marginal cost equals marginal revenue.
Pricing under monopolistic competition
The document discusses pricing under different market structures:
1) Monopolistic competition is characterized by many small sellers offering differentiated products. Firms have some pricing power but face elastic demand. They produce sub-optimally in both the short and long run.
2) Pure competition has many buyers and sellers of homogeneous products. Each firm is a price taker and production is at minimum average cost in the long run.
3) A pure monopoly has sole control of supply and faces downward sloping demand. It prices where marginal revenue equals marginal cost to maximize profits.
4) Oligopoly is dominated by a few interdependent firms. Pricing depends on factors like rivals' prices, advertising
Similar to Econ 3 diagrams (20)
Market Forms - Perfect competition, Monopoly, Monopsony, Oligopoly.pptx
Market Forms - Perfect competition, Monopoly, Monopsony, Oligopoly.pptx
Basics of business monopoly and competitive markets
Basics of business monopoly and competitive markets
PROFIT MAXIMISATION using MR, MC and profit maximisation.pptx
PROFIT MAXIMISATION using MR, MC and profit maximisation.pptx
Recently uploaded
Introduction to AI for Nonprofits with Tapp Network
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
The History of Stoke Newington Street Names
Presented at the Stoke Newington Literary Festival on 9th June 2024
www.StokeNewingtonHistory.com
Hindi varnamala | hindi alphabet PPT.pdf
हिंदी वर्णमाला पीपीटी, hindi alphabet PPT presentation, hindi varnamala PPT, Hindi Varnamala pdf, हिंदी स्वर, हिंदी व्यंजन, sikhiye hindi varnmala, dr. mulla adam ali, hindi language and literature, hindi alphabet with drawing, hindi alphabet pdf, hindi varnamala for childrens, hindi language, hindi varnamala practice for kids, https://www.drmullaadamali.com
Main Java[All of the Base Concepts}.docx
This is part 1 of my Java Learning Journey. This Contains Custom methods, classes, constructors, packages, multithreading , try- catch block, finally block and more.
Your Skill Boost Masterclass: Strategies for Effective Upskilling
Your Skill Boost Masterclass: Strategies for Effective UpskillingExcellence Foundation for South Sudan
Strategies for Effective Upskilling is a presentation by Chinwendu Peace in a Your Skill Boost Masterclass organisation by the Excellence Foundation for South Sudan on 08th and 09th June 2024 from 1 PM to 3 PM on each day.BÀI TẬP BỔ TRỢ TIẾNG ANH 8 CẢ NĂM - GLOBAL SUCCESS - NĂM HỌC 2023-2024 (CÓ FI...
BÀI TẬP BỔ TRỢ TIẾNG ANH 8 CẢ NĂM - GLOBAL SUCCESS - NĂM HỌC 2023-2024 (CÓ FI...Nguyen Thanh Tu Collection
https://app.box.com/s/y977uz6bpd3af4qsebv7r9b7s21935vdDigital Artifact 1 - 10VCD Environments Unit
Digital Artifact 1 - 10VCD Environments Unit - NGV Pavilion Concept Design
PCOS corelations and management through Ayurveda.
This presentation includes basic of PCOS their pathology and treatment and also Ayurveda correlation of PCOS and Ayurvedic line of treatment mentioned in classics.
How to Fix the Import Error in the Odoo 17
An import error occurs when a program fails to import a module or library, disrupting its execution. In languages like Python, this issue arises when the specified module cannot be found or accessed, hindering the program's functionality. Resolving import errors is crucial for maintaining smooth software operation and uninterrupted development processes.
How to Add Chatter in the odoo 17 ERP Module
In Odoo, the chatter is like a chat tool that helps you work together on records. You can leave notes and track things, making it easier to talk with your team and partners. Inside chatter, all communication history, activity, and changes will be displayed.
Top five deadliest dog breeds in America
Thinking of getting a dog? Be aware that breeds like Pit Bulls, Rottweilers, and German Shepherds can be loyal and dangerous. Proper training and socialization are crucial to preventing aggressive behaviors. Ensure safety by understanding their needs and always supervising interactions. Stay safe, and enjoy your furry friends!
Executive Directors Chat Leveraging AI for Diversity, Equity, and Inclusion
Let’s explore the intersection of technology and equity in the final session of our DEI series. Discover how AI tools, like ChatGPT, can be used to support and enhance your nonprofit's DEI initiatives. Participants will gain insights into practical AI applications and get tips for leveraging technology to advance their DEI goals.
Chapter 4 - Islamic Financial Institutions in Malaysia.pptx
Chapter 4 - Islamic Financial Institutions in Malaysia.pptxMohd Adib Abd Muin, Senior Lecturer at Universiti Utara Malaysia
This slide is special for master students (MIBS & MIFB) in UUM. Also useful for readers who are interested in the topic of contemporary Islamic banking.
Types of Herbal Cosmetics its standardization.
Physiology and chemistry of skin and pigmentation, hairs, scalp, lips and nail, Cleansing cream, Lotions, Face powders, Face packs, Lipsticks, Bath products, soaps and baby product,
Preparation and standardization of the following : Tonic, Bleaches, Dentifrices and Mouth washes & Tooth Pastes, Cosmetics for Nails.
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...Dr. Vinod Kumar Kanvaria
Exploiting Artificial Intelligence for Empowering Researchers and Faculty,
International FDP on Fundamentals of Research in Social Sciences
at Integral University, Lucknow, 06.06.2024
By Dr. Vinod Kumar Kanvariaclinical examination of hip joint (1).pdf
described clinical examination all orthopeadic conditions .
Recently uploaded (20)
Introduction to AI for Nonprofits with Tapp Network
Introduction to AI for Nonprofits with Tapp Network
Film vocab for eal 3 students: Australia the movie
Film vocab for eal 3 students: Australia the movie
Your Skill Boost Masterclass: Strategies for Effective Upskilling
Your Skill Boost Masterclass: Strategies for Effective Upskilling
BÀI TẬP BỔ TRỢ TIẾNG ANH 8 CẢ NĂM - GLOBAL SUCCESS - NĂM HỌC 2023-2024 (CÓ FI...
BÀI TẬP BỔ TRỢ TIẾNG ANH 8 CẢ NĂM - GLOBAL SUCCESS - NĂM HỌC 2023-2024 (CÓ FI...
Executive Directors Chat Leveraging AI for Diversity, Equity, and Inclusion
Executive Directors Chat Leveraging AI for Diversity, Equity, and Inclusion
Chapter 4 - Islamic Financial Institutions in Malaysia.pptx
Chapter 4 - Islamic Financial Institutions in Malaysia.pptx
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...
Econ 3 diagrams
- 1. Econ 3 Diagram Revision
- 2. Product Curves • The upper part of this diagram shows the law of diminishing returns. At point A the law sets in and it shows that any extra worker employed does not add as much output as the previous worker • This is not due to the worker being any less motivated or efficient it is simply due to the fact that any further specialization and division of labour has become exhausted • When marginal productivity starts to fall at B diminishing returns also sets in.
- 3. Monopoly Equilibrium • Profit maximization where MC=MR • AR is the demand curve • Price is at point A • The diagram does not differentiate between short run and long-run as monopolies have high barriers to entry, which prevents firms from entering the market to share the supernormal profits in the long run • A monopolist has the market power to preserve profit by keeping competitors out
- 4. Monopoly and Economic Efficiency • Monopoly equilibrium is productively and allocatively inefficient • P>MC where the monopoly is producing too low an output and selling at too high a price • Firms supernormal profits are reduced because of a lack of competitive pressure and so the monopoly is likely to become x-inefficient • There is no competition because of the high barriers to entry which mean organizational slack not eliminated
- 5. The Kinked Demand Curve • The kinked demand curve shows how firms react to competitors changing the price of their goods in an oligopolistic market. • When a firm changes it price P1- P2 it expects firms not to follow suit and keep their prices stable at P1. Rivals try to gain profit and market share by keeping their prices stable and so demand is seen to be price elastic when dealing with price increases. • Conversely, when cutting prices (P2-P3) firms are expected lower their prices to match the initial price cut. Therefore, firms fail to gain a greater market share and the firm expects the demand to be relatively inelastic for a price decrease. • Ergo, prices remain rigid
- 6. Kinked demand curve and stable price in oligopoly • This kinked demand curve provides another explanation for why prices stay stable in an oligopoly • In the first example firms do not want to change price because of their interdependence and the fear of a loss of profit • However, in this example firms may not have to change price because of the discontinuation the MR curve. • It discontinues because as we know the MR is always twice as steep and the associated MR curve at Q1 follows that principle. So, at point Q1 it is simply twice as steep as the AR curve and the kink is causing the discontinuation of the curve • So, at the point where MC=MR there is the discontinuation and any change in the MC curve will not result in a change in price • Therefore, firms do not have to change their prices and so, remain rigid
- 7. Perfect Competition • Large number of buyer and sellers • Perfect information • Can sell any quantity at the ruling market price • Price takers • Homogenous products • Perfectly competitive firms face a perfectly elastic demand curve • Demand curve facing the firm is at the ruling market price • This price is also determined by the market supply and demand • Selling above P1 would generate no sales as customers can and will buy the perfect substitutes at the lower ruling market price • Selling below P1 would ake no sense for the firm as they can clear their production line at the higher ruling market price
- 8. Perfect Competition short-run equilibrium • Each firm in a perfectly competitive market passively accepts the ruling market price. • Firms can sell as much as they wish at this price. • In the short run firms can make supernormal profits because the ruling market price is greater that the Average Total Cost.
- 9. Long-run equilibrium perfect competition • In the long-run firms can enter or exit the market in perfect competition • As firms from the outside can see supernormal profits being made more firms enter the market shifting supply to S1 • This causes prices to fall • As P2 is below the ATC firms make a loss • The losses or subnormal profits cause firms to leave the market and supply shit to S2 where in the long-run only normal profits are made at P3