Chapter 8: Economics of Big Business

Slides:

Advertisements

Similar presentations

Monopolistic Competition

Advertisements

Exercises Chapters Do you know … which market structure produces the highest output? the lowest output? which market structure charges the lowest.

IMPERFECT COMPETITION MONOPOLY. GENERAL DESCRIPTION firm produces differentiated products  firm can set its price by itself, the imperfect competitor.

a market structure in which there is only one seller of a good or service that has no close substitutes and entry to the market is completely blocked.

Monopoly Outline: Outline: Characteristics of a monopoly Characteristics of a monopoly Why monopolies arise? Why monopolies arise? Production and pricing.

Chapter 9 – Profit maximization

Possible Barriers to Entry “a market served by a single firm” 14 Monopoly.

Monopolistic Competiton. Assumptions Many sellers and many buyers Slightly different products Easy entry and exit (low barriers)

The Production Decision of a Monopoly Firm Alternative market structures: perfect competition monopolistic competition oligopoly monopoly.

1 © 2010 South-Western, a part of Cengage Learning Chapter 9 Monopoly Microeconomics for Today Irvin B. Tucker.

 relatively small economies of scale  many firms  product differentiation  close but not perfect substitutes  product characteristics, location, services.

0 Introduction  A monopoly is a firm that is the sole seller of a product without close substitutes.  The key difference: A monopoly firm has market.

Market Dynamics and Pricing Entry and Exit in Perfect Competition and Monopoly; Monopsony; Price Discrimination; Monopolistic Competition.

1 QTCTFCTVCATCAFCAVCMC

Prepared by Robert F. Brooker, Ph.D. Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.Slide 1 Managerial Economics.

PowerPoint Slides by Robert F. BrookerHarcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Managerial Economics in a Global Economy.

Monopoly CHAPTER 15.

Monopolistic Competition

MONOPOLY Why do monopolies arise? Why is MR < P for a monopolist?

Chpt 12: Perfect Competition 1. Quick Reference to Basic Market Structures Market StructureSeller Entry Barriers# of SellersBuyer Entry Barriers# Buyers.

Topic 2.3 Theory of the Firm. Cost Theory Fixed Cost: costs that do not vary with changes in output example: rent Variable Cost: costs that vary with.

Types of Market Structure in the Construction Industry

Competition and Market Power

1 Chapter 8 Practice Quiz Tutorial Monopoly ©2004 South-Western.

Chapter 25: Monopoly ECON 152 – PRINCIPLES OF MICROECONOMICS

Warm-Up, 11/5 Using a Marginal and Average Costs graph, show a firm that is losing money as some price… Then, place to the right of that a market graph.

1 Chapter 11: Monopoly. 2 Monopoly Assumptions: Restricted entry One firm produces a distinct product Implications: A monopolist firm is a ‘price setter,’

Price Discrimination Price discrimination exist when sales of identical goods or services are transacted at different prices from the same provider Example.

Monopoly This firm is now the ultimate market power in the galaxy.

C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 1 1.

Managerial Economics in a Global Economy, 5th Edition by Dominick Salvatore Chapter 8 Market Structure: Perfect Competition, Monopoly and Monopolistic.

Chapter 10 Monopoly. ©2005 Pearson Education, Inc. Chapter 102 Topics to be Discussed Monopoly and Monopoly Power Sources of Monopoly Power The Social.

10- 1 Four Market Models Monopoly Examples Barriers to Entry The Natural Monopoly Case Monopoly Demand Monopoly Revenues & Costs Output & Price Discrimination.

Chapter 12 Monopoly. Basic Definitions Imperfect Competition: Occurs when firms in a market or industry have some control over the price of their output.

Chapters (8) Perfect Competition (8) Monopoly (8).

1.  exists when a single firm is the sole producer of a product for which there are no close substitutes. 2.

1 Monopoly Economics for Today by Irvin Tucker, 6 th edition ©2009 South-Western College Publishing.

AP Economics Mr. Bernstein Module 61: Introduction to Monopoly November 2015.

DEPARTMENT : ELECTRICAL (MORNING), 2 nd YEAR, CODE:-09 SUBJECT : ENGINEERING ECONOMICS AND MANAGEMENT TOPIC : TYPES OF MARKETS GROUP NAME : GROUP MEMBERS.

Monopoly 1. Why Monopolies Arise Monopoly –Firm that is the sole seller of a product without close substitutes –Price maker Barriers to entry –Monopoly.

Monopoly 15. Monopoly A firm is considered a monopoly if... it is the sole seller of its product. it is the sole seller of its product. its product does.

Monopoly, Monopolistic Competition & Oligopoly

Survey of Economics Irvin B. Tucker

Monopoly and imperfect competition

(normal profit= zero econ. profit)

11 C H A P T E R Pure Monopoly.

24 C H A P T E R Pure Monopoly.

©2002 South-Western College Publishing

Mr. Bernstein Module 61: Introduction to Monopoly November 2017

1 PowerPoint Slides Prepared by Robert F. Brooker, Ph.D. Slide 1.

AP MICRO REVIEW FINAL EXAM

Monopoly © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a.

Monopolistic Competition

Less competition Perfect Competition Monopolistic Competition

Monopolistic Competition & Oligopoly

BEC 30325: MANAGERIAL ECONOMICS

Chapter 8 Market Structure: Perfect Competition, Monopoly , Oligopoly and Monopolistic Competition PowerPoint Slides by Robert F. Brooker Harcourt, Inc.

Market Structure: Monopoly and Monopolistic Competition

Profit maximization.

BEC 30325: MANAGERIAL ECONOMICS

Monopoly (Part 1) Chapter 21.

Chapter 24: Pure Monopoly

BEC 30325: MANAGERIAL ECONOMICS

Monopoly (Part 2) Chapter 21.

BEC 30325: MANAGERIAL ECONOMICS

Monopoly © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a.

Monopoly © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a.

Pure Monopoly Chapter 10.

Definition, Causes & Pricing Chapter 15

Presentation transcript:

Chapter 8: Economics of Big Business

Market Structure Perfect Competition Monopoly Monopolistic Competition Oligapoly Monopoly

Degree of Market Power Concentration Ratio percentage of the market sale by the largest four (or eight) firms CR > 0.70 indicates significant market power

Perfect Competition Many buyers and many sellers Homogeneous product No barriers to enter the market Firms are price takers: Market price is set by D & S Firms produce all they can at the market price

Profit Maximization Business firms try to make the highest possible profit Profit = Total Revenue – Total Cost Profit is maximized when MC = MR MC = additional cost of producing an extra unit MR = additional revenue from selling an extra unit

Price-Taker Firms: P=MR=MC Market S D S = MC D = MR P P MC=MR S D q Q Quantity Quantity

Monopoly Many buyers, but only one seller Product maybe unique or differentiated Barriers to enter the market Firms are price-makers, facing the market demand

Reasons for Monopoly Control the supply of raw materials Investment / R&D requirements Government licensing Natural Monopoly

Price-Maker Firms: P>MC=MR D MC P MC=MR MC D MR Quantity Q

Perfect Competition vs. Monopoly Monopoly price is higher than the competitive price Monopoly output is lower than the competitive output Since monopoly causes resource misallocation it is outlawed by the Anti Trust Law

Price-Output Comparison Pc = competitive price Qc = competitive output Pm = monopoly price Qm = monopoly output Pm>Pc but Qm<Qc Price D Dead Weight Loss=ABC MC A P=MC Pm C Pc MC=MR B D MR Quantity Qm Qc

Natural Monopoly A firm that experiences “economies of scale” so that it operates with a declining average cost It is less costly to have one large firm than several small firms Government permits natural monopoly, but regulates its price to minimize the DW-loss

Long-run Average Cost $ Cost 4 1 25 100 Quantity Diseconomies of scale