KINH TẾ VI MÔ Chapter VI quan nguyen

MARKET STRUCTUREPERFECT COMPETITION IMPERFECT COMPETITION MONOPOLY MONOPOLISTIC COMPETITION OLIGOPOLY... PERFECT COMPETITION- No non-price competition no advertisement - Not necessary t

CHAPTER 6:

MARKET STRUCTURES

* Definition

Where all activities in economy are price-led

I MARKET

MARKET STRUCTURE

PERFECT

COMPETITION

IMPERFECT COMPETITION MONOPOLY

MONOPOLISTIC COMPETITION OLIGOPOLY

II PERFECT COMPETITION

II PERFECT COMPETITION

- No non-price competition (no advertisement)

- Not necessary to choose supplier

3 Demand and marginal

revenue curves

- Demand curve: parallel

with horizontal axis

II PERFECT COMPETITION

II PERFECT COMPETITION

 5 Break-even, shut down point

 = TR – TC = Q (P - ATC)

 P> ATCmin →  > 0 → profit

 P= ATCmin →  = 0 → break-even point

 P< ATCmin →  < 0 → loss

 AVCmin< P < ATCmin → continue producing

 P < AVCmin → shut down

II PERFECT COMPETITION

5 Break-even, shut down

max

II PERFECT COMPETITION

P=MR P*

P=MR P*

* Continue: lose -  = P*ABC

* Exit: lose FC = BCEF

 FC > - 

 Continue producing

B C

A

AVC ATC

II PERFECT COMPETITION

5 Break-even, shut down

point

P < AVCmin

TR = P*AQ*O

TC = OCBQ*

* Continue: lose -  = P*ABC

* Exit: lose FC = BCEF

FC < - 

→ shut down point

MC

P=MR P*

P

AVC ATC

6 Supply curve

- Coinciding with MC,

P=MR P*

7 Producer’s surplus

(PS)

- The area below price

line and above marginal

II PERFECT COMPETITION

Total cost function of a perfect competition firm is:

TC = Q2 + Q + 100

a At P = 27$, state out Q* and Пmax

b State out the break-even point of this firm

c At P = 9$, should this firm close its

business?

d Show this firm’s supply curve

EXERCISE

III MONOPOLY

◄

3 Demand and marginal

steep as the slope of

the demand curve (and

the same intercept)

III MONOPOLY

Dead weight loss

max: MR=MC

a a

d e

III MONOPOLY

III MONOPOLY

5 Supply curve of a monopolist

P changes, Q is constant P is constant, Q changes

No 1:1 relationship between price and

PERFECT COMPETITION VS MONOPOLY

MC < P Can earn positive profit

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