microeconomic presentation
TRANSCRIPT
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LAI YEE LING 06DSK12F2038
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NUMBER OF FIRM (LING)
PERFECT COMPETITION-Under perfect competition there are a large number ofbuyers and sellers in the market competing with eachother. The price fixed by the industry is accepted by all the
firms operating in the market . Is aprice t kerand no onecan influence the price of goods.
MONOPOLY- Monopoly there is only one single seller but a largenumber of buyers. Monopoly is aprice m kerwith totalmarket control.
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AVAILABLE SUBSTITUTES (IQA)
PERFECTLY COMPETITIVE-Every firm in a perfectly competitive industryproduces exactly the same product as every otherfirm. An infinite number of perfect substitutes are
available.
MONOPOLY
A monopoly firm produces a unique product thathas no close substitutes and is unlike any otherproduct.
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Average revenue curves (EPA)
The average revenue curves under competition andmonopoly take different shapes. perfect competition is a
horizontal straight line parallel to OX-axis. The industry
demand curve or revenue curve slopes downward from
left to right.
The average revenue curve under monopoly slopes
downward and its corresponding marginal revenue
curve lie below the average revenue curve. Under perfectcompetition MR Curve is the same as AR Curve.
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RESOURCE MOBILITY (BELLA)
PERFECTLY COMPETITIVE-Perfectly competitive firms have complete freedom to
enter the industry or exit the industry. There are no any
barriers or restriction on entry /exit.
-Should having perfect knowledge of the market.
MONOPOLYA monopoly firm often achieves monopoly status because
the entry of potential competitors is prevented.
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INFORMATION (WAIE)
PERFECTLY COMPETITIVE-Each firm in a perfectly competitive industry possesses
the same information about prices and production
techniques as every other firm.
MONOPOLY
-A monopoly firm, in contrast, often has information
unknown to others.
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Marginal cost curve
For perfectly competitive firm its supplycurvev ispositively-sloped.
Marginal cost curve for a monopoly isNOT, . there is NO positively-sloped
supply curve for a market controlled by a
monopoly.
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Short-run Equilibrium(LING)
PREFECT COMPETITIVE
-A Period in which at least one of the inputs is fixed.
-A firm in the short run, will possibly enjoy threetypes of profit.
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Supernormal profit (LING)
Economic profit
AC
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Normal profit (WAIE)
Breakeven
AC=AR
Cost/revenue/price
Quantity
M
C
AC
AVC
AR=MR=DD=PE
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Subnormal profit (BELA)
Economic Loss
AC>AR
LOSS
Cost/revenue/price
Quantity
MC
AC
AVC
AR=MR=DD=PE
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Long-run Equilibrium for
prefect competition (IQA)
Firm in the long run can only earn normal profit or zeroprofitdue to free entry and exit entry.
E
LMC
LA
C
MR=AR=DD
=P
Quantity
cost/revenue/pric
e
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Short-run Equilibrium(EPA)
Monopoly-A time period in which there are fixed factors and
variable factors.
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Supernormal profit (EPA)
Economic profitAR>AC / TR>TC
MC
AC
DD=A
RMR
E
Profit
Cost/revenue/price
Quantity
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Normal profit (IQA)
Breakeven point
TR=TC / AR=AC
Cost/revenue/price
Quantity
MC
AC
DD=ARM
R
EAVC
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Subnormal profit (LING)
Economic loss
TR
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Long-run Equilibrium(BELLA) The firm continues earn supernormal prof i ts in the
long-run since there are strong barriers to the entry
of new firms in the monopolistic industry.
LMC
LAC
DD=A
R
M
R
PROFI
TE
Cost/revenue/pric
e
Quantit
y
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CONCLUDE (WAIE)