Econ 208 Final Exam Crash Course PDF

Econ 208 - Final Exam Crash Course Imperfect Competition 3...

Econ 208 - Final Exam Crash Course Imperfect Competition 3 Strategic behaviour Imperfect competition : m a r ke t struc ture that falls between perfectly competitive markets 3 monopolies Monopolistic competition : industries with many small firms Cresturants hair salans , Ogliopoly : industries with a few large firms (airlines) distribution of market power among firms Industrial concentration : measurement of the ↳ Industry few firms is concentrated w/ a highly Product Differentiation : - do not sell identical products - firms set their ow n price - firms adjust output when market demand shifts Non-price competition : - firms need to attract customers to their products a away from the other firms in the industry advertising product quality , product quality, entry barriers - , (sales) Takaus 45 + 22 + 10 + 8 = 0 85 - 785 %. 100 L divide by all # Ogliopoly be 4 biggest terms numbers (sum) a re dominating the output - Monopolistic comp. is similar to perfect comp. EXCEPT for product differentiation Similarities : - freedom of entry & exit don't take into account (competitors) firms possible outputs of other firms > too - - many Monopolistic comp. on graph : works like monopoly (downward sloping DC - produces the cost is equal to quantity w h e re marginal marginal - re ve n u e only Mono. C MONOPOLISTIC SHORT-RUN MONOPOLISTIC LONG-RUN - ↳ be they're firms will profit b have - exc e ss capacity makinggas ↓ T Same a s PC - m o re firms = less profit 50 demand would shift lessI less - ----- meaning $150[ it would just ATC O profit be touching - OR 40 - - - - - $10 per book = P = AR ([in5 Downward sloping demand c u r v e exactly h a l o o Profit = = = 50 (50 profit maximizing ↳ (P-ATC) - - when where does 15 go up ↳ ↓ go 40)xQ X Q does Q of 15 up 3 h i t ATC point h i t DC? a t P = 50 · ! = - = $10 per book = 10 x 15 = $150 exce Q = 10 LR Profit = (P-ATC) Q ↓ = (20 - 20) x 10 = 0