ECON 100A Lecture Notes - Lecture 34: Monopolistic Competition, Perfect Competition, Market Clearing
Document Summary
Monopoly: just one seller that determines the quantity supplied and the market- clearing price. Diamond manufacturer (determine what the price is) Oligopoly: a few firms, the decisions of each influencing the payoffs to others. Monopolistic competition: many firms each making a slightly different product. Different types of yogurt, different types of bottled water. Pure competition (perfect competition): many firms, all making the same product. Each firm"s output level is small relative to the total. Identical product; can"t differentiate corn produced by max and michael. Perfectly competitive market knows it has no influence over the market price for its product; often called a price-taker. The firm is free to vary its own price. However, if a firm sets a price below market price, they will make no sales and quantity demanded from firm is 0. If a firm sets a price above market, they will make all sales and quantity demanded from firm is the entire market-quantity demanded.