LO 11.1, 11.2, 11.3, 11.4, 11.5, 11.6, 11.7
11.1 Identify and explain the characteristics of monopolistic competition.
Relatively large numbers
Easy entry conditions
11.2 Using revenue and cost information, determine the price, output, and profit for a firm in monopolistic competition in the short run.
? Describe the demand curve for monopolistic competitor.
? Calculate profit maximization in the monopolistically competitive market.
RULE OF MR = MC STILL APPLIES
Example: Figure11-1 text page 282
11.3 Describe long-run equilibrium in monopolistic competition.
? Define long-run in monopolistic competition.
? Compare the long-run equilibrium in monopolistic competition to perfect competition.
Example: Figure 11-2 text page 285
Economic Efficiency is P = MC = ATC
Allocative Efficiency P = MC right amount of resources are used for the P
Productive Efficiency P = Min ATC lowest price for the least-cost
Monopolistic Competition is
P = MC no under allocation (P above MC)
P = min ATC no not min cost
11.4 Identify and explain the characteristics of oligopoly.
Homogeneous or differentiated products
Economies of scale
Barriers to Entry
The Urge to Merge
Example: Four firm sales concentration ratio
11.5 Identify and explain the types of pricing behaviour that can occur in oligopoly.
? Identify game theory oligopolists may use.
Best response function
Game theory models