ECON 001A Lecture 2: Chapter_16

There is no real need for advertising in perfect competition or monopoly. However, firms in monopolistic competition and oligopoly usually do advertise. What do you think about online advertising techniques vs. more traditional advertising?

Suppose the market demand for good x is:

P = 1000 - 5Q

And this good can be produced at constant MC = AC = $50.

Determine P, Q and profit level if the market is

a. Monopoly

b. duopoly ( Cournot model)

c. perfect competition.