Detailed presentation on how price is determined, factors effecting price.
The price determination under following markets,
1). Perfect Competition
2). Monopoly
3). Duopoly
4). Oligopoly
have been described in detail.
Price Determination Under Short & Long Period, Cournot Model & Stackelberg Model are also discussed.
An Engineering & Managerial Economics presentation on Price Determination, topics covered were price determination under Perfect Competition, Monopoly, Duopoly and Oligopoly.
The Contents Are:
Monopoly
Perfect Competition
Imperfect Competition
Oligopoly
Monopolistic Competition:
Characteristics Of Monopolistic Competition
Monopolistic Competitive Firm Earing Profit In Short Run
Monopolistic Competitive Firm Losses In Short Run
Monopolistic Competition In Long Run
Monopolistic Competition And The Welfare Of Society
Advertising
The Critique Of Advertising
The Defence Of Advertising
An Engineering & Managerial Economics presentation on Price Determination, topics covered were price determination under Perfect Competition, Monopoly, Duopoly and Oligopoly.
The Contents Are:
Monopoly
Perfect Competition
Imperfect Competition
Oligopoly
Monopolistic Competition:
Characteristics Of Monopolistic Competition
Monopolistic Competitive Firm Earing Profit In Short Run
Monopolistic Competitive Firm Losses In Short Run
Monopolistic Competition In Long Run
Monopolistic Competition And The Welfare Of Society
Advertising
The Critique Of Advertising
The Defence Of Advertising
The interconnected characteristics of a market, such as the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition, extent of product differentiation, and ease of entry into and exit from the market.Four basic types of market structure are (1) Perfect competition: many buyers and sellers, none being able to influence prices. (2) Oligopoly: several large sellers who have some control over the prices. (3) Monopoly: single seller with considerable control over supply and prices. (4) Monopsony: single buyer with considerable control over demand and prices.
The interconnected characteristics of a market, such as the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition, extent of product differentiation, and ease of entry into and exit from the market.Four basic types of market structure are (1) Perfect competition: many buyers and sellers, none being able to influence prices. (2) Oligopoly: several large sellers who have some control over the prices. (3) Monopoly: single seller with considerable control over supply and prices. (4) Monopsony: single buyer with considerable control over demand and prices.
Monopoly - Profit-Maximization in Monopoly - EconomicsFaHaD .H. NooR
Monopoly Economics
A monopoly (from Greek μόνος mónos ["alone" or "single"] and πωλεῖν pōleîn ["to sell"]) exists when a specific person or enterprise is the only supplier of a particular commodity. This contrasts with a monopsony which relates to a single entity's control of a market to purchase a good or service, and with oligopoly which consists of a few sellers dominating a market).[2] Monopolies are thus characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the possibility of a high monopoly price well above the seller's marginal cost that leads to a high monopoly profit.[3] The verb monopolise or monopolize refers to the process by which a company gains the ability to raise prices or exclude competitors. In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge overly high prices.[4] Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market).[4]
A monopoly is distinguished from a monopsony, in which there is only one buyer of a product or service; a monopoly may also have monopsony control of a sector of a market. Likewise, a monopoly should be distinguished from a cartel (a form of oligopoly), in which several providers act together to coordinate services, prices or sale of goods. Monopolies, monopsonies and oligopolies are all situations in which one or a few entities have market power and therefore interact with their customers (monopoly or oligopoly), or suppliers (monopsony) in ways that distort the market.[citation needed]
Monopolies can be established by a government, form naturally, or form by integration.
In many jurisdictions, competition laws restrict monopolies. Holding a dominant position or a monopoly in a market is often not illegal in itself, however certain categories of behavior can be considered abusive and therefore incur legal sanctions when business is dominant. A government-granted monopoly or legal monopoly, by contrast, is sanctioned by the state, often to provide an incentive to invest in a risky venture or enrich a domestic interest group. Patents, copyrights, and trademarks are sometimes used as examples of government-granted monopolies. The government may also reserve the venture for itself, thus forming a government monopoly
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.
This PPT deals with what is monopoly, the monopoly power, the sources of monopoly power, the social costs of monopoly power, monopsony, its power and the limiting power
Students should be able to:
Understand the assumptions of perfect competition and be able to explain the behaviour of firms in this market structure.
Understand the significance of firms as price-takers in perfectly competitive markets. An understanding of the meaning of shut-down point is required. The impact of entry into and exit from the industry should be considered.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
3. Price.
Determination Of Price.
Factors Effecting Price.
Factors Kept In Mind Before Determining The Price.
Perfect Competition
Definition.
Meaning.
Features.
Perfect Competition Vs Pure Competition.
Condition For Firms Equilibrium Under Perfect
Competition.
Price Under Perfect Competition In Short Period.
Price Under Perfect Competition In Long Period.
4. Monopoly.
Features.
Demand & Revenue Under Monopoly.
Determination Of Price & Equilibrium Under
Monopoly.
Price Determination Under Short & Long Period.
Price Discriminating Monopoly.
Price & output determination under discriminating
monopoly.
Oligopoly.
Types Of Oligopoly.
Features Of Oligopoly.
Sources Of Oligopoly Market.
5. Duopoly
Definition.
Duopoly exists when.
Best Response function.
Types of duopoly.
CournotModel.
Stackelberg Model.
Advantages.
Disadvantages.
Assumption.
6. Definition of price.
Definition of price determination.
Objectives of price determination.
Need of price determination.
Factors effecting of price determination.
Determination Of Price.
Factors Effecting Price.
Factors Kept In Mind Before Determining The
Price.
7. The value that one will purchase a finite quantity,
weight, or other measure of a good or service.
OR
Price is the sacrifice that one party pays another to
receive something in exchange.
8. Pricing is the process of determining what a
company will receive in exchange for its
product.
9. Maximize long-run & short-run profit.
Increase sales.
Increase market share.
TO OBTAIN THE TARGET OF RETURN OF INVESTMENT.
Company growth.
To obtain or maintain the loyalty and enthusiasm
of distribution and other sales personnel.
10. Market price serves as the adjustment mechanism
to move markets to equilibrium.
11. Factors
Your Cost
Market
Demand
Your Profit
Industry
Standards
Who is Your
Client
Skill Level
Experience
12.
13.
14.
15. Excess demand exists when, at the current price, the
quantity demanded is greater than quantity supplied.
Excess supply exists when, at the current price, the
quantity supplied is greater than the quantity
demanded.
18. When there is EXCESS DEMAND for a good, price will
tend to rise.
When there is EXCESS SUPPLY of a good, price will
tend to fall.
19. Changes in consumer incomes
Changes in the prices of substitutes
Changes in the prices of complements
Changes in tastes
20. Changes in prices of inputs.
Changes in technology.
Changes in taxes.
21. P
supply
Q
p0
q0
demand @ old beer price
demand @ higher beer price
p1
q1
22.
23. Definition.
Meaning.
Features.
Perfect Competition Vs Pure Competition.
Condition For Firms Equilibrium Under Perfect
Competition.
Price Under Perfect Competition In Short Period.
Price Under Perfect Competition In Long Period.
24. Perfect competition is the theoretical case illustrating the
most competitive market possible.
25. • “Perfect Competition Exists In Markets Where
There Are So Many Sellers That No One Is Big Enough
To Have Any Appreciable Influence Over Market
Price.”
-Prof. Bach
26. The concept of competition is used in two ways in
economics.
Competition as a process is a rivalry among firms.
Competition as the perfectly competitive market
structure.
27. Both buyers and sellers are price takers.
A price taker is a firm or individual who takes the market
price as given.
In most markets, households are price takers – they
accept the price offered in stores.
Both buyers and sellers are price takers.
The retailer is not perfectly competitive.
A store is not a price taker but a price maker.
28. The number of firms is large.
Any one firm's output is minuscule when compared
with the total market.
Large means that what one firm does has no bearing on
what other firms do.
The firms' products are identical.
This requirement means that each firm's output is
indistinguishable from any competitor's product.
29. There are no barriers to entry.
Barriers to entry are social, political, or economic
impediments that prevent other firms from entering
the market.
Barriers sometimes take the form of patents granted to
produce a certain good.
Technology may prevent some firms from entering the
market.
Social forces such as bankers only lending to certain
people may create barriers.
30. There is complete information.
Firms and consumers know all there is to know about
the market – prices, products, and available technology.
Any technological advancement would be instantly
known to all in the market.
Firms are profit maximizers.
The goal of all firms in a perfectly competitive market is
profit and only profit.
Firm owners receive only profit as compensation, not
salaries.
31. Pure Competition IS ABSENCE OF MONOPOLY…
CHARACTERISTICS OF PURE COMPETITION
Large no. of buyers & sellers,
Homogeneous Products,
Free entry & exit of firms.
32. It means the level of output where firm
is maximizing it’s profits & therefore ,
has no tendency to change its output…
33.
Marginal Cost= Marginal Revenue= Average Revenue
Marginal Cost Curve should cut the Marginal Revenue
curve from below.
34. AR : Average Revenue curve
MR : Marginal Revenue curve
D : Demand)curve
AR=MR=D
It would be a horizontal line or parallel to the X-axis
36. Condition : 2
Marginal Cost
Curve should cut
the Marginal
Revenue curve
from below.
37.
38. Short Period is defined as the time
period in which the firm can change its
output without changing the existing plant
& machinery.
39. Price will be affected because we cannot increase
our supply acc. to demand..
Only variable factors can be altered..
Price set so in the short run is EQUILIBRIUM
PRICE..
40. Price at which there is no tendency to
change in the current situation..
Demand & Supply are equal…
41. Pricing Decision is influenced by these
two forces of DEMAND & SUPPLY…
42. LAW OF DEMAND
Applicable for buyers…
Price is inversely
proportional to the
demand…
LAW OF SUPPLY
Applicable for
suppliers…
Price is directly
proportional to the
supply…
43. CASES OF FIRM’S EQUILIBRIUM
IN SHORT PERIOD
SUPER-NORMAL
PROFITS
SHUTDOWN
POINT
LOSS
NORMAL
PROFITS
45. NORMAL
PROFITS
AR=SAC
In situation of
firm’s
equilibrium
(i) MC=MR=AR
(ii) AR=min(SAC)
46. Firms can also earn zero profit or even a loss
where MC = MR.
Even though economic profit is zero, all
resources, including entrepreneurs, are being paid
their opportunity costs.
In all three cases (profit, loss, zero profit), determining
the profit-maximizing output level does not depend
on fixed cost or average total cost, by only where
marginal cost equals price.
47. LOSS
AR<SAC
In situation of
firm’s
equilibrium
(i) MC=MR=AR
(ii) AR<(SAC)
48. The shutdown point is the point at which the firm
will gain more by shutting down than it will by staying
in business.
As long as total revenue is more than total variable
cost, temporarily producing at a loss is the firm’s best
strategy since it is taking less of a loss than it would by
shutting down.
49. SHUT-DOWN
POINT
AR<SAC :
AR=SAVC
In situation of firm’s
equilibrium
(i) MC=MR=AR=
min SAVC
(ii) AR=SAVC<SAC
50. Equilibrium Price is determined at the point
where the se forces are EQUAL…
Quantity demanded & supplied at this point is
EQULIBRIUM QUANTITY…
51. When the price is less /more than equilibrium
price , then there will be tendency of movement
of this equilibrium output & ultimately equilibrium
price will prevail…
Demand & Supply forces counteract each other…
55. Long Period is defined as that period
during which , all factors become variable
factors & firms can change their scale of
production…
56. Price that prevails in long-run is NORMAL
PRICE..
Supply plays a dominant role in determination of
long-run normal price..
Demand & Supply can be adjusted to every
possible way as per requirement in long run..
57. Change all types of fixed factors..
Normal Price is always equal to minimum long
run average cost..
Supply gets sufficient time to adjust itself
according to changed conditions & demand..
58. AR=LAC
In situation of
firm’s
equilibrium
(i) MC=MR=AR=
min LAC
(ii) AR(P)=LAC
59.
60.
61. Definition.
Features.
Type.
Demand & Revenue Under Monopoly.
Price Discriminating Monopoly.
Monopolistic competition.
Advantages And Disadvantages.
62. “A pure monopoly exists when there is only one
producer in a market. There are no direct
competitors.”
-According to Prof. Ferguson
“Pure or absolute monopoly exists when a single
firm is the sole producer for a product for which
there are no close substitutes.”
-Mc Connel
63.
64. One seller & large number of buyers:
Under monopoly there should be single
producer of the commodity.
The buyers of the product are in large
number.
Only Seller can influence the price.
Monopoly is also an industry:
• There is only one firm & the difference
between firm & industry disappears.
65. Restrictions on the entry of new firms:
There are some restrictions on the entry of new
firms into monopoly industry
There is no competitor o a monopoly firm.
No close substitutes:
If close substitute are available then the
monopolist will not be able to determine the
price of his commodity as per his discretion.
66.
67. Natural monopoly.
Public monopoly.
Legal monopoly.
Simple and discriminating.
Absolute monopoly and limited monopoly.
State monopoly and private monopoly.
68.
69. In a monopoly situation there is no difference
between firm & industry. Accordingly, under
monopoly situation, firm’s demand curve also
constitutes industry’s demand curve. Demand
curve of the monopolist is also average revenue
(AR) curve. It slopes downward. It means if the
monopolist fixes high price, the demand will
shrink. On the contrary, if he fixes low price, the
demand will expand. Under monopoly, average
revenue & marginal revenue curves are separate
from one another. Both slope downwards.
70.
71. Following facts come to light as a result of
negative AR & MR:
Demand rises with fall in price (AR). Hence, by
lowering the price, a monopolist can sell more units
of the commodity.
AR is another name of price per unit, i.e., P=AR.
With fall in price, both AR & MR fall, but falling MR
is more. Rate of fall in MR is usually more than rate of
fall in AR.
AR is never 0, but MR may be 0 or even -ve.
72.
73. Main objective of monopoly is: maximum profit from sale:
It can achieve in 2 ways:
firm can either fix price
it can fix the quantity to be sold the customers.
A monopoly firm fixes the price and leave the quantity to
be determined by demand of customer in market During
fixing the price ,monopoly firm has 2 imp conderation :
nature of demand
nature of supply of commodity.
74.
75.
76.
77. Definition:
It is a market situation in which there are many seller
of a particular product but the product of each seller is
in some way differentiated in the mind of consumer s
from the product of every other seller .
- Leftwitch
78. A: large number of sellers:
B:freedom of entry or exit:
C:non-price competition:
D:product differentiation:
79.
80. A Monopolist avoid duplication of staff, equipments,
expenses are reduced. this means lower price and
consumers benefit .
When there is single producer ,scale of production
become large. large output reduced cost…
A monopolist needs not spend huge sum of money on
wasteful and competitive advertisement .this reduce
selling cost.
81. Monopoly leads to unequal distribution of income.
It leads restriction in output. By limitation output,
one can charge a high price and make more profits.
He limits output:
By preventing new firm from entering into industry and this
limitation results in high price
By destroying a portion of article already produced.
By keeping productive resources partly idle.
82.
83.
84. Definition.
Features of oligopoly.
Types Of Oligopoly.
Classification of Oligopoly Market.
Price and Output Determination in Oligopolistic Market.
The Kinked Demand Curve.
Oligopoly and its Efficiency.
Advantages and Disadvantages.
Comparison b/w Monopoly and Oligopoly.
85. Oligopoly is derived
from the Greek work
“olig” meaning “few” or
“a small number.”
Oligopoly is a market structure featuring a small number
of sellers that together account for a large fraction of market
sales.
86. An oligopoly is a market structure characterized by:
Few firms
Either standardized or differentiated products
Difficult entry
87. Oligopoly is :
‘Competition among the few.’
OR
‘Few sellers DOMINATE the market.’
88. •Fewness of sellers
•Seller interdependence
•Feasibility of coordinated action among
ostensibly independent firms
•Price rigidity
89. Types of Oligopoly
On nature of product sold, oligopoly is of
two types:
Homogeneous Oligopoly
such as industries producing steel, aluminium,etc.
Heterogeneous Oligopoly or
Differentiated Oligopoly
such as industries manufacturing automobiles,tv
sets,computers,etc.
90. Classifications Of Oligopoly
Open and Closed Oligopoly Partial and Full Oligopoly
Perfect and imperfect
Oligopoly
Syndicated and Organised
Oligopoly
Collusive and Non-Collusive
Oligopoly
91. We have good models of price-output
determination for the
structural cases of pure competition
and pure monopoly. Oligopoly is
more problematic, and a wide range
of outcomes is possible.
92. Some economists have assumed that
oligopolists firms ignore interdependence which
however helps in finding the equilibrium price and
output of a particular oligopolist firm.
Second assumption is that oligopolist is able to
predict the reaction pattern of the rivals.
Third assumption is that oligopoly firms
realising their interdependence will pursue their
common interest and will enter into the aggrement
and work .
93. Howsoever, still we find that
fixing of price under oligopoly
market situation is very
difficult and involves a no. of
assumptions regarding
behaviour of oligopoly group
& reactions of rival firms to
price and output changes.
94. Many oligopolistic industries exhibit price rigidity or
stability . Price rigidity may be due to following reasons:
(a): The oligopolistic industry has reached in a stage of maturity.
(b): Firms might have learnt by experience that price war is
harmful & firms have found satisfactory price level.
(c): Firms have realised that they cannot increase their profit by
lowering the price otherwise other firms will follow the price cut
by the firm.
(d): A firm may compete by non-price competition rather than
reducing the price.
95. quantit
y
$
D
P*
Q*
It has been observed that in many
oligopolistic industries prices remain sticky
or inflexible for a long time . The most
popular explanations for this behaviour is
given by an American economist Sweezy
called “Kinked Demand Curve
Hypothesis”.
96. The kinked demand curve has
following features:
The upper portion of demand curve is
elastic.
The lower portion of demand curve is
inelastic.
97. If the firm raises its
price above P, it faces an
elastic demand curve,
payoff low
If the firm lowers its
price below P, it faces
an inelastic demand
curve, payoff low
98. Different firms can have
different MCs. As long as
they fall with in the
discontinuous MR, P will
remain stable.
Output Effect < Price
Effect for price
movements with the
discontinuous MR curve.
If MC increases enough,
all firms raise their prices
and the kink vanishes.
99. The question whether oligopoly affects economic
welfare depends on whether or not they exercise
market power over prices and production
In competition, the level of output produced is
where P=MC or MB=MC. Hence, net benefits to
society are maximized. Market prices as low as
possible and respond to changes in market forces.
This allows prices to help direct resource
allocation.
100. Large firms with strong hold over the market are able to
make huge profits.
Companies are capable of deciding prices as their own
choice.
Dominant market players are able to make long-term
profits.(As market don’t allow old business to increase
their shares.)
High profits generated by companies can be used for
innovation & development of products.
Helps in lowering average cost of production of goods.
Stable prices in market helps customers to plan and
stabilize their expenditure.
101. There is only one dominating company,hence
customers have no other choice.
Small business fail to establish themselves as a brand.
With presence of little competition ,dominant
companies may not think of improving their products.
New firms can’t enter the market easily.
Firms cannot take independent decisions.
The micro-economic goal of fair wealth is not fulfilled
as maximum profit is made by major players only.
102. Monopoly Oligopoly
Meaning: One seller dominates the A small no .of sellers
entire market. dominate the industry.
Prices : High prices may be Moderate/fair
charged. pricing.
Barriers A monopoly usually exist Barriers to entry are very
entry : when barriers to entry are high because of economies
high. of scale.
Sources of Market making ability by Market making ability because
Power : virtue of being only viable of very few firms in the industry.
seller in the industry.
Examples: Microsoft(OS),Google Health insurers,wireless carriers,beer,
(web search),DeBeers, etc. media(TV,book publishing,movies)etc.
103. In monopoly, the level of
output produced is
where P>MC or MB>MC.
Hence, net benefits to
society are NOT
maximized.
Market prices are higher
and respond to changes
in market forces. This
allows prices to help
direct resource
allocation.
In oligopoly, the level of
output is somewhere
between the competitive
and the monopolistic
outcome. As the
oligopolist produces
closer to the competitive
solution, the net benefits
to society move closer to
being maximized.
104. Duopoly
Definition.
Duopoly exists when.
Best Response function.
Types of duopoly.
CournotModel.
Stackelberg Model.
Advantages.
Disadvantages.
Assumption.
105. Definition.
Definition.
Duopoly exists when.
Best Response function.
Types of duopoly.
Cournot Model.
Stackelberg Model.
Advantages.
Disadvantages.
Assumption.
106.
107. An oligopoly with two firms.
OR
Control of a commodity or service in a given market by
only two producers or suppliers.
108.
109. No firm can gain by unilaterally changing its own
output to improve its profit.
A point where the two firm’s best-response functions
intersect.
110. Firm 1’s best-response function is
1
a
c
1
2
Q r Q
1 1 2 2
b
2
Q
Similarly, Firm 2’s best-response function is (c2 is
firm 2’s MC)
1
a
c
2
1
Q r Q
2 2 1 2
2
Q
b
113. 1. Each firm chooses a quantity of output instead of a price.
2. In choosing an output, each firm takes its rival’s output
as given.
114.
115. The First firm’s best response function is:
*=30 – y2/2
y1
The Second firm’s best response function is:
y2
*=30 – y1/2
Taken together, these two best response functions can
be used to find the equilibrium strategy combination
for Cournot’s model.
116.
117. The profit of one firm decreases as the output of the
other firm increases (other things equal).
The Nash equilibrium output for each firm is positive.
118. All strategy combinations that give the first firm the
chosen level of profits is known as an indifference
curve or iosprofit curve.
Profits are constant along the isoprofit curve.
119.
120. y1* maximizes profits for the first firm given the second
firm’s output of y2*.
Any strategy combinations below the indifference curve
gives the first firm more profit than the Nash
equilibrium.
The result above relates to the key assumption that the
first firm’s profit increases as the second firm’s output
decreases.
121.
122.
123. Q1
Cournot equilibrium
M
Q1
r1
C
Q2
C
Q1
r2
Q2
S
Q1
Q2
S
Stackelberg Equilibrium
Note: Firm 1 is producing on Frim 2’s reaction function
(maximizes its profits given the reaction of Firm 2)
124. 124
Leader produces more than the Cournot
equilibrium output.
Larger market share, higher profits.
First-mover advantage.
Follower produces less than the Cournot
equilibrium output.
Smaller market share, lower profits.
125. Large firms having strong hold over the market are able to
make huge profits as there are few players in the market.
Prevents new players from entering the market through
several barriers of entry. Dominant market players usually
make long-term profits in an oligopolistic environment.
High profits generated by the companies can be used for
innovation and development of new products and
processes.
Close competition between two firms.
126. Setting of prices may be advantageous for the firms,
but if done unrealistically, it may prove to be a great
disadvantage for consumers.
Creative ideas or plans of small businesses in the
oligopolistic market fail to realize because they cannot
overcome the control of major market players.
With the presence of little competition, dominant
companies may not think of improving their products.
127. Two firms are producing and selling Homogeneous
product.
The firms operate at zero cost of production.
Each firm has a aim of profit maximization.
Market demand is equally divided in the two firms.
Each firm demand curve is linear.
Each firm can not supply to entire market.