Market Imperfect Competition Review

University:
Cornell University
Course:
AEM 4420 | Emerging Markets
Academic year:

2023
Views:

479

Pages:

3
Author:

ityeg3co

Perfect Competition -Many small firms Unit 4: Imperfect Competition Characteristics of the Four Market Structures Monopolistic Competition Oligopoly Identical produk band prod Pifferentialed Low barnices Some contro lover No need tondente PRIEC -Price talkers low barrers Lotsofnonprice competition Demand and Marginal Revenue Why is demand greater than marginal revenue for all imperfectly competitive firms? Each additiona Unit Sold they have to lowerprice Why are monopolies inefficient? 1 Chark, a higher price 2. Not allocatucly efficient 3. Not productively efficient Monopoly Graph (profit) Draw and label a Monopoly making profit Afew large Monopoly -One largefigum producers 410 -Unique product Forentined product -Idential High barriers -Price Makers -High barriers Mutuellen -Price Maker Inter Price Elastic and Inelastic Range Elista | Incluste D ice Price Quantity Total Revenue MR MC Az D MR Quantity Monopoly Graph (loss) Draw and label a Monopoly making profit MC AC Price D MR TR Quantity Price Discriminating Monopoly Draw and label a price discriminating monopoly MC ATC D=MR Price A MC ATC P P B C D E P3 P2 P G F Monopoly Practice For a Competitive Market 1. P and Q P4 Qa 2. Consumer Surplus AP4C For a Monopoly 3. P and Q Unregulated P5 Q 1 4. P and Q Socially Optimal P 5. Pa Pand Q Fair Return 6. Consumer Surplus AP SAB 7. Dead Weight Loss BGC 0 MR Demand Quantity Monopolistic Competition Draw a Mono. Comp. firm in long-run equilibrium Price MCATC D MR Quantity Excess Capacity (define below and label on graph) Given current resources firm Gan produce at lowest costs but decide not to, If a monopolistically competitive firm is making a profit in the short-run, what will happen to the demand and number of firms in the long run? Firms ExcessCapacity Oligopoly 1. If David decides to advertise now and Lindsey decides to do it later, what is David's expected profit? $1,000 Assume that two business owners are deciding between advertising now and advertising later. The chart shows expected profit with Lindsey's on the left 2. What is Lindsey's dominant strategy? NOW 3. What is David's dominant strategy? Does not have 4. If both owners have the information but do not actively collude, what will be the outcome? Produce Now Assume the advertising company offers a deal that increases the profit for both owners by $2,000 but only if they advertise later. Based on these changes: 5. What is Lindsey's dominant strategy? Now 6. What is David's dominant strategy? Later Now Lindsey Later Now $5,000 $4,000 David Later $3,000 $3,500 $900 $1,000 $1,500 $1,800 D

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