Tải bản đầy đủ
Chapter 05 Perfect Competition, Monopoly, and Economic versus. Normal Profit

Chapter 05 Perfect Competition, Monopoly, and Economic versus. Normal Profit

Tải bản đầy đủ

Chapter Outline
• From Perfect Competition to
Monopoly
• Supply Under Perfect
Competition

McGraw-Hill/Irwin

©2012 The McGraw-Hill Companies, All Rights Reserved

5-2
1-2

From Perfect Competition to
Monopoly





Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly

McGraw-Hill/Irwin

©2012 The McGraw-Hill Companies, All Rights Reserved

5-3
1-3

Picking the Quantity to
Maximize Profit The Perfectly
P Competitive Case
MC

ATC
AVC

P*

MR

Q*

Q

Many Competitors
McGraw-Hill/Irwin

©2012 The McGraw-Hill Companies, All Rights Reserved

5-4
1-4

Picking the Quantity to Maximize
Profit The Monopoly Case
P
MC
ATC
P*

AVC

D
MR
Q*

Q

No Competitors
McGraw-Hill/Irwin

©2012 The McGraw-Hill Companies, All Rights Reserved

5-5
1-5

Characteristics of Perfect
Competition
• a large number of competitors, such that
no one firm can influence the price
• the good a firm sells is indistinguishable
from the ones its competitors sell
• firms have good sales and cost forecasts
• there is no legal or economic barrier to its
entry into or exit from the market

McGraw-Hill/Irwin

©2012 The McGraw-Hill Companies, All Rights Reserved

5-6
1-6

Monopoly
• The sole seller of a good or service.
• Some monopolies are generated
because of legal rights (patents
and copyrights).
• Some monopolies are utilities (gas,
water, electricity etc.) that result
from high fixed costs.

McGraw-Hill/Irwin

©2012 The McGraw-Hill Companies, All Rights Reserved

5-7
1-7

Monopolistic Competition
• Monopolistic Competition: a
situation in a market where there are
many firms producing similar but not
identical goods.
• Example : the fast-food industry.
McDonald’s has a monopoly on the
“Happy Meal” but has much
competition in the market to feed kids
burgers and fries.

McGraw-Hill/Irwin

©2012 The McGraw-Hill Companies, All Rights Reserved

5-8
1-8

Oligopoly
• Oligopoly: a situation in a
market where there are very
few discernible competitors
• Examples:
• Satellite TV service (Direct TV,
Dish Network)
• Airlines (American, Delta etc.)
McGraw-Hill/Irwin

©2012 The McGraw-Hill Companies, All Rights Reserved

5-9
1-9

Which Model Fits Reality?
• Perfect competition is rare outside
agriculture though it fits some labor
markets.
• Monopolies are common in utilities.
• Major branded companies are
typically either in oligopolistic or
monopolistically competitive
industries.

McGraw-Hill/Irwin

©2012 The McGraw-Hill Companies, All Rights Reserved

5-10
1-10

Examples of Different Market
Forms
Perfect
Monopolisti Oligopoly
Competitio c
n
Competitio
n
1)
2)

Agricultur 1)
e
2)
Lumber

McGraw-Hill/Irwin

Fast Food 1)
Long
Distance 2)
Service

Monopoly

Cars and 1)
Trucks
Soft
Drinks
2)

Windows
Operating
system
Local
Residentia
l electric
power

©2012 The McGraw-Hill Companies, All Rights Reserved

5-11
1-11

Distinguishing Characteristics
Between Market Forms
Perfect
Competition

Monop Oligopoly
olistic
Compe
tition

Monopoly

Number Many-often
of Firms thousands or

Severa
l*

Few*

One

Barriers None
to Entry

Few

Substantial Insurmounta
ble, at least
in the short
run

Product Identical
Similarit
y

Similar Similar or
but not Identical
identic
al

even millions

N/A

* The line between “several” and “few” is not definite
McGraw-Hill/Irwin

©2012 The McGraw-Hill Companies, All Rights Reserved

5-12
1-12