Market Structures and Output

Market Structures and Output
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Learn about the different market structures and which one is likely to produce the highest or lowest level of output.

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Slide2ExercisesChapters 13-17

Slide3Do you know … which market structure produces the highest output? the lowest output? which market structure charges the lowest price? the highest price? which market structure is the most efficient? the least efficient?

Slide4Comparing prices and outputsin different market structures Perfectly competitive market (Pc and Qc) Monopolistically competitive market (Pmc and Qmc) Oligopoly (Po and Qo) Monopoly (Pm and Qm)

Slide5The Exercise The figure in the next slide depicts the demand curves in four different market structures. Assume that all four markets have the same MC curve. Determine the linear equations for all curve, AR, MR, and MC curves. Solve for the profit-maximizing quantities and prices in all four markets. Compare P with MC, prices, and outputs.

Slide6Demand and MC curves

Slide7Demand, MR, and MC curves

Slide8Linear equations

Slide9P*, Q*, and MC*

Slide10Comparisons

Slide11Calculating DWL

Slide12Now you know … which market structure produces the highest output; the lowest output. which market structure charges the lowest price; the highest price. which market structure is the most efficient; the least efficient.