101 lecture 16 monopolistic competition

Microeconomics Lecture 16

Monopolistic Competition

Monopolistic Competition

Brand Competition

Monopolistic Competition

Brand Competition

The Four Market Structures

The Four Market Structures

The Four Market Structures

PerfectCompetition

The Four Market Structures

PerfectCompetition

Monopoly

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

Brand

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated Either

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated Either

Ease of Entry

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated Either

Ease of Entry

Easy

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated Either

Ease of Entry

Easy Blocked

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated Either

Ease of Entry

Easy Blocked Easy

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated Either

Ease of Entry

Easy Blocked Easy Hard

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated Either

Ease of Entry

Easy Blocked Easy Hard

Examples

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated Either

Ease of Entry

Easy Blocked Easy Hard

ExamplesCommodities

Rice

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated Either

Ease of Entry

Easy Blocked Easy Hard

ExamplesCommodities

RiceGovernment

Utilities

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated Either

Ease of Entry

Easy Blocked Easy Hard

ExamplesCommodities

RiceGovernment

Utilities

BrandsClothing

Restaurants

The Four Market Structures

PerfectCompetition

MonopolyMonopolisticCompetition

BrandOligopoly

Number of Firms

Many One Many Few

Type of Product

Identical Unique Differentiated Either

Ease of Entry

Easy Blocked Easy Hard

ExamplesCommodities

RiceGovernment

Utilities

BrandsClothing

Restaurants

ManufacturingCars

Computers

The Four Market Structures

Number MarginalCost

TotalCost

AverageCost

1

2

3

4

5

Number MarginalCost

TotalCost

AverageCost

1 5

2 4

3 6

4 9

5 16

Number MarginalCost

TotalCost

AverageCost

1 5 5 5

2 4 9 4.5

3 6 15 5

4 9 24 6

5 16 40 8

Number MarginalCost

TotalCost

AverageCost

1 40

2 60

3 90

4 160

5 250

Number MarginalCost

TotalCost

AverageCost

1 40 40 40

2 20 60 30

3 30 90 30

4 70 160 40

5 90 250 50

Number MarginalCost

TotalCost

AverageCost

1 300

2 420

3 600

4 800

5 1500

Number MarginalCost

TotalCost

AverageCost

1 300 300 300

2 540 840 420

3 960 1800 600

4 1400 3200 800

5 4300 7500 1500

Q

$

D

MR

Monopoly

Q

$

D MR=Perfect Competition

Q

$

D MR=Perfect Competition

Q

$

D MR=Perfect Competition

Q

$

D MR=Perfect Competition

Q

$

D MR=Perfect Competition

Q

$

D MR=Perfect Competition

Q

$

D MR=Perfect Competition

Q

$

Monopolistic Competition

DMR

Short Run

Q

$

Monopolistic Competition

DMR

Short Run

Steep Demand

Q

$

Monopolistic Competition

DMR

Short Run

Long Run

Steep Demand

Q

$

Monopolistic Competition

DMR

Short Run

Long Run

Steep Demand

Q

$

Monopolistic Competition

DMR

Short Run

Long Run

Steep Demand

Demand Flattens

Q

$

Monopolistic Competition

DMR

Short Run

Long Run

Steep Demand

Demand Flattens

Q

$

Monopolistic Competition

DMR

Short Run

Long Run

Steep Demand

Demand Flattens

Q

$

Monopolistic Competition

DMR

Short Run

Long Run

Steep Demand

Demand Flattens

Q

$

Monopolistic Competition

DMR

Short Run

Long Run

Steep Demand

Demand Flattens

Q

$Short Run

DMR

Monopolistic Competition

Q

$Short Run

DMR

MC

Monopolistic Competition

Q

$Short Run

DMR

MC

Monopolistic Competition

Q

$Short Run

DMR

MC

QS

Monopolistic Competition

Q

$Short Run

DMR

MC

QS

Monopolistic Competition

Q

$Short Run

DMR

MC

QS

PS

Monopolistic Competition

Q

$Short Run

DMR

MC

ATC

QS

PS

Monopolistic Competition

Q

$Short Run

DMR

MC

ATC

QS

PS

Monopolistic Competition

Q

$Short Run

DMR

MC

ATC

QS

PS

Monopolistic Competition

Q

$Short Run

DMR

MC

ATC

QS

PS

Monopolistic Competition

Q

$Short Run

DMR

MC

ATCProfit

QS

PS

Monopolistic Competition

Q

$Short Run

DMR

MC

ATCProfit

High PriceLarge Quantity

QS

PS

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATCProfit

High PriceLarge Quantity

QS

PS

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

QS

PSDemand Flattens

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

QS

PSDemand Flattens

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

QS

PSDemand Flattens

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

QSQ

PSDemand Flattens

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

QSQ

PSDemand Flattens

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

QSQ

PPSDemand Flattens

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

PPSDemand Flattens

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

P

PS

L

L

Demand Flattens

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

P

PS

L

L

Demand Flattens

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

P

PS

L

L

Demand Flattens

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

P

PS

L

L

Demand Flattens

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

P

PS

L

L

Demand Flattens

Profit

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

Profits disappearin the long run

due to competition

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

P

PS

L

L

Demand Flattens

Profit

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

Profits disappearin the long run

due to competition

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

P

PS

L

L

Demand Flattens

Profit

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

Profits disappearin the long run

due to competition

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

P

PS

L

L

Demand Flattens

Profit

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

Profits disappearin the long run

due to competition

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

P

PS

L

L

Demand Flattens

Profit

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

Profits disappearin the long run

due to competition

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

P

PS

L

L

Demand Flattens

Profit

Monopolistic Competition

Q

$Short Run

Long Run

DMR

MC

ATC

Profits disappearin the long run

due to competition

High PriceLarge Quantity

Lower PriceLower Quantity

QSQ

P

PS

L

L

Demand Flattens

Profit

Monopolistic Competition

D

MR

MC

Profits

D

MR

MC

Competition flattens the Demand Curve

and squeezes profits.

D

MR

MC

Competition flattens the Demand Curve

and squeezes profits.

Q

$

Market Competition

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Marginal Costs

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Marginal Costs

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Marginal Costs

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Marginal Costs

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Marginal Costs

QSR

PSR

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Marginal Costs

AverageTotal Costs

QSR

PSR

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Marginal Costs

AverageTotal Costs

QSR

PSR

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Marginal Costs

AverageTotal Costs

QSR

PSR

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Marginal Costs

AverageTotal Costs

QSR

PSR

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Marginal Costs

AverageTotal Costs

QSR

PSR

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Long Run Demand

Long Run Marginal Revenue

Marginal Costs

AverageTotal Costs

QSR

PSR

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Long Run Demand

Long Run Marginal Revenue

Marginal Costs

AverageTotal Costs

QSR

PSR

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Long Run Demand

Long Run Marginal Revenue

Marginal Costs

AverageTotal Costs

QSR

PSR

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Long Run Demand

Long Run Marginal Revenue

Marginal Costs

AverageTotal Costs

QSR

PSR

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Long Run Demand

Long Run Marginal Revenue

Marginal Costs

AverageTotal Costs

QSR

PSR

QLR

PLR

Q

$

Market Competition

Short Run Demand

Short Run Marginal Revenue

Long Run Demand

Long Run Marginal Revenue

Marginal Costs

AverageTotal Costs

QSR

PSR

QLR

PLR

QuizName and ID#

1. Name the four market structures.

2. What does the demand curve look like in perfect competition?

3. Why is marginal revenue different than demand in a monopoly?

4. Where are profits maximized or losses minimized?