ECO 10 - 24 NOV - Lecture 10 ECO 100Y5Y 24 November 2008 A....

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Lecture 10 24 November 2008 ECO 100Y5Y A. Cohen 1 E C O N O M I C S PARKIN BADE Lecture 10 24 November 2008 E C O N O M I C S PARKIN BADE Chapter 13 Monopolistic Competition and Oligopoly Monopolistic Competition Monopolistic competition is a model that assumes many small firms product differentiation some monopoly / price power free entry and exit Implications firm faces downward-sloping demand curve MR curve demand curve firm can choose price and output continued
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24 November 2008 ECO 100Y5Y A. Cohen 2 Outcomes profit maximization; choose Q where MC = MR ; charge highest price (on demand curve) short-run economic profit possible, attract entry leftward shift demand curve facing each firm long-run economic profit = 0, P = ATC ; ATC not minimum (excess capacity) P > ATC by amount of markup continued P S Q S C S Economic profit Figure 13.2a Monopolistic Competition: Short Run (modified) D Q 0 P MR MC ATC Figure 13.4,13.5a
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This note was uploaded on 04/25/2010 for the course ECONOMICS ECO100Y taught by Professor Furlong during the Fall '09 term at University of Toronto- Toronto.

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ECO 10 - 24 NOV - Lecture 10 ECO 100Y5Y 24 November 2008 A....

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