AEM 250 - 2 - 1 Perfectly competitive market a Complete...

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1. Perfectly competitive market a. Complete property rights b. Atomistic participants c. Complete information d. No transaction costs 2. Pure monopoly – the only supplier for a unique product, without any close substitute 3. Oligopoly – a firm that produces a product for which only a few rival firms produce close substitutes 4. Perfect competitive firm faces a perfectly elastic demand curve 5. Monopolists/oligopolist face a downward sloping demand curve for its product 6. Revenue = PQ = MB x Q 7. TC = integral of MC 8. AC = TC/Q 9. MR = increase in REV/increase in Q 10. Profit = Rev-TC 11. Equilibrium for monopolists MR = MC 12. Social equilibrium MB = MC 13. Monopolists have equilibrium at lower quantity – good 14. Monopolists maximize profit 15. At the monopoly optimum, marginal benefit is not equal to marginal cost, therefore it is not efficient, creating Deadweight Loss 16. Monopolistic markets are good for conservation Fisheries 1. Maximum economic yield MR=MC a. Economic planner b. Less effort the extra effort can be used to do other purposes
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