Session 15 16 17 Market Structures
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Session 15 16 17 Market Structures
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Session 15 16 17 Market Structures - Transcript
Market Structure
Less Competitive Perfect Competition Monopolistic Competition Oligopoly Monopoly
o Ce o M r
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 1
Perfect Competition
Many buyers and sellers Buyers and sellers are price takers Product is homogeneous Perfect mobility of resources Economic agents have perfect knowledge Example Global Forex Market Stock Market
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 2
Monopolistic Competition
Many sellers and buyers Differentiated product Perfect mobility of resources Example FMCG Products Fast food outlets
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 3
Oligopoly
Few sellers and many buyers Product may be homogeneous or differentiated Barriers to resource mobility Example Automobile Cement Steel Manufacturers
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 4
Monopoly
Single seller and many buyers No close substitutes for product Significant barriers to resource mobility
Control of an essential input Patents or copyrights Economies of scale Natural monopoly Government franchise HAL Post Office Railways
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 5
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 6
Perfect Competition Price Determination
QD 625 5 P QD QS QS 175 5 P
625 5 P 175 5 P 450 10 P P 45
QD 625 5P 625 5 45 400 QS 175 5P 175 5 45 400
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 7
Perfect Competition Short Run Equilibrium of the Firm
Firm s Demand Curve Market Price Marginal Revenue Firm s Supply Curve Rising Portion of Marginal Cost Curve from the Minimum Point of Average Variable Cost
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 8
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 9
Perfect Competition Long Run Equilibrium of the Firm
Quantity is set by the firm so that in long run Price Marginal Cost Average Cost Economic Profit 0
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 10
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 11
Competition in the Global Economy
Foreign Exchange Rate
Price of a foreign currency in terms of the domestic currency
Depreciation of the Domestic Currency
Increase in the price of a foreign currency relative to the domestic currency
Appreciation of the Domestic Currency
Decrease in the price of a foreign currency relative to the domestic currency
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 12
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 13
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 14
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 15
Monopoly
Single seller that produces a product with no close substitutes Sources of Monopoly
Control of an essential input to a product Patents or copyrights Economies of scale Natural monopoly Government franchise Post office
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 16
Monopoly Short Run Equilibrium
Demand curve for the firm is the market demand curve Firm produces a quantity Q where marginal revenue MR is equal to marginal cost MC Exception Q 0 if average variable cost AVC is above the demand curve at all levels of output
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 17
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 18
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 19
Monopolistic Competition
Many sellers of differentiated similar but not identical products Limited monopoly power Downward sloping demand curve Increase in market share by competitors causes decrease in demand for the firm s product
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 20
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 21
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 22
PowerPoint Slides Prepared by Robert F Brooker Ph D
Copyright 2007 by Oxford University Press Inc
Slide 23
