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the firm and market structures (characteristics of 4 categories…
- the firm and market structures
- characteristics of 4 categories
perfect competition
- quantity sold is highest
- price is usually lowest but depending on demand elasticity, increasing returns to scale
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monopolistic competition
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competitive firm do not earn economic profit.
there will be a market compensation for rental of capital and of management services, lack of pricing power => no extra margins.
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pure monopoly
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investors may beniefit when investting to the ones which have large margins and substantial positive cash flows
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- relationships between price, marginal revenue(MR),marginal cost(MC), economic profit, elasticity of demand under each market structure
financial analyst understand the characteristics of market structures to better forecast a firm's future profit stream
- optimal marginal revenue = marginal cost
- marginal revenue = price in perfect competition
- in the remaining structures, price > marginal revenue because firms sell more units only by reducing the per unit price
- firm's supply function under each market structure #
- optimal price and output for firms under each market structure
- factors affecting long-run equilibrium under each market structure
(cần tìm hiểu - cầu 5)
- the use and limitations of concentration measures in identifying market structure
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- the concentration ratio
- HHI
- type of market structure within which a firm operates