Microeconomic Presentation

7/27/2019 Microeconomic Presentation

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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)

Microeconomic Presentation

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