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Exercises Chapters 13-17

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Do you know … which market structure produces the highest output? the lowest output? which market structure charges the lowest price? the highest price? which market structure is the most efficient? the least efficient?

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Comparing prices and outputs in different market structures Perfectly competitive market (Pc and Qc) Monopolistically competitive market (Pmc and Qmc) Oligopoly (Po and Qo) Monopoly (Pm and Qm)

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The Exercise The figure in the next slide depicts the demand curves in four different market structures. Assume that all four markets have the same MC curve. Determine the linear equations for all curve, AR, MR, and MC curves. Solve for the profit-maximizing quantities and prices in all four markets. Compare P with MC, prices, and outputs.

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Demand and MC curves

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Demand, MR, and MC curves

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Linear equations

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P*, Q*, and MC*

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Comparisons

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Calculating DWL

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Now you know … which market structure produces the highest output; the lowest output. which market structure charges the lowest price; the highest price. which market structure is the most efficient; the least efficient.

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Market Equilibrium We will consider the two extreme cases Perfect Competition Monopoly.

Market Equilibrium We will consider the two extreme cases Perfect Competition Monopoly.

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