Output
Determinati
on in
Various
Market
Structure
Areta, Quennie BSACT3
Coria, Queena
Deximo, Layrose
Matalog, Nikki
Ramos, Joyce
Introduction
Pure
Competition
Output Decision
Total revenue = P x Q
MR= AR
P= MR = MC = AC
ATC is u-shaped
Various quantities
the firm will
supply at each
price.
MC Depicts the
firms supply
curve.
P rises production
also rises
MR= MC at E
Equilibrium
output= OQ
Since AR=
ATC or OP=
EQ, the firm is
just earning a
normal profit.
At E, MR= MC
MR= Horizontal line
MC= U-shaped that
cut
MR curve at E.
OQ is the equilibrium
output for the firm.
Profit per unit EB (ARATC)
AR is EQ
ATC is BQ
Supernatural
profits
in
short
run
Total profits= ABEP
Simplify P<ATC
Shutdown
Exit If the total revenue that it would get is < its total
cost. (TR<TC)
By dividing TR/Q<TC/Q
Exit if P<ATC
The process of entry and exits end only when price and
average total cost are driven to equality
Monopoly
A firm that is the sole
seller of a product
without close
substitutes
Single
No
Seller
Close Substitutes
Price
Maker
Blocked
Entry
Advertising
Characteristics of Monopoly
Monopoly Resources
a key resource required for production is owned by a single
firm
Monopoly VS Competition
Monopolys Revenue
Profit Maximization
Monopolys Profit
Monopoly VS Competition
Monopolys Revenue
For a competitive
firm : P = MR = MC
For a monopoly firm: P
> MR = MC
Profit Maximization
Profit = TR TC
Profit = (TR/Q
TC/Q) x Q
Profit = (P ATC ) x
Q
Monopolys Profit
Price Discrimination
Regulation
Public Ownership
Doing Nothing
Monopolistic
Competition
1.Many
sellers
2.Product
3.Free
differentiation
Entry
Marketing Differentiation
Oligopoly
a market structure in
which there is a few
dominant firms
are large enough to
influence the market
price
products can be
homogenous or
differentiated
Game Theory
Game Theory
Game Theory
Summary
The End
That In All
Things,
GOD MAY
BE
GLORIFIED!
Areta, Quennie BSACT3
Coria, Queena
Deximo, Layrose
Matalog, Nikki
Ramos, Joyce