ECO 304K Lecture Notes - Lecture 13: Imperfect Competition, Demand Curve, Oligopoly
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ECO 304K Full Course Notes
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Document Summary
Imperfectly competitive industry (page 264): an industry in which individual firms have some control over the price of their output. Market power (page 264): an imperfectly competitive firm"s ability to raise price without losing all the quantity demanded for its product. Monopoly: industry with a single firm in which the entry of new firms is blocked. Oligopoly: industry in which there is a small number of firms, each large enough so that its presence affects prices. Monopolistic competitors: firms that differentiate their products in industries with many producers and free entry. In monopolies, the cost side of the profit equation stays the same but the revenue side does not. Monopolists set prices by looking at the trade-off in terms of profit earned between getting more money for each unit sold versus selling fewer units. Profit-maximizing level of output for a monopolist: mr = mc.