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Market structure
Perfect Monopoly Oligopoly Monopoly
competition
No. Of firms Many Many Few 1
Freedom of Not restricted Not restricted Some barriers of High barriers of
entry entry entry
Influence over None Some Some Price maker
price subject to
demand curve
Nature of Homogenous e.g. Differentiated Varied e.g. cars, No…

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Technology: no room for more than 1 firms tends to happen where there are substantial
fixed costs of production e.g. network rails
Natural monopoly: arises in an industry in which there are such substantial economies of scale
that only 1 firm is viable

Oligopoly

Few sellers
Aware of how other…

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Costs
Total,marginal and average costs

AC: TC / Q
MC: cost of producing one more
SRAC: SRTC/ OUTPUT
SRMC: COST OF PRODUCING 1 MORE/ EACH OUTPUT LEVEL

Costs facing firms

Short run the firm faces limited flexibility
Varying quantity of labour input
Varying the amount of capital the firm has…

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Firms Motivation
Motivations of firms

Exist to organise production
What motivates them to produce particular level of output and price?

Profit maximisation

Profits= total revenue- total costs
Set out to maximise profits BUT there is opportunity cost = required rate of return
regarded as fixed cost

Short run

Remain in…

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