1 / 10

Contemporary Economics: An Applications Approach By Robert J. Carbaugh 3nd Edition

Contemporary Economics: An Applications Approach By Robert J. Carbaugh 3nd Edition. Chapter 5: Competition and Monopoly: Virtues and Vices. 15. 14. 13. 12. 11. 10. 9. 8. 7. 6. 5. 4. 3. 2. 1. 0. 0. 1,400,000. 2,800,000. Quantity of fish (lbs.). Perfect Competition.

louvain
Download Presentation

Contemporary Economics: An Applications Approach By Robert J. Carbaugh 3nd Edition

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Contemporary Economics:An Applications ApproachBy Robert J. Carbaugh3nd Edition Chapter 5: Competition and Monopoly: Virtues and Vices

  2. 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 1,400,000 2,800,000 Quantity of fish (lbs.) Perfect Competition Market equilibrium facing competitive firm Price Market supply Market demand Carbaugh, Chap. 5

  3. 70 15 14 63 13 56 12 11 49 10 42 9 8 35 7 28 6 5 21 4 14 3 2 7 1 0 0 0 1 2 3 4 5 6 7 8 9 10 11 12 0 2 4 6 8 10 12 Quantity of fish (lbs.) Quantity of fish (lbs.) Perfect Competition Demand and revenue for a competitive firm Demand and Marginal Revenuefor one company Total revenue $ $ Total revenue Demand = P = MR 7 1 Carbaugh, Chap. 5

  4. 8.00 9.00 8.00 7.00 7.00 6.00 6.00 5.00 5.00 4.00 4.00 3.00 3.00 2.00 2.00 1.00 1.00 0.00 0.00 0 3000 0 500 1000 1500 2000 2500 3000 3500 Quantity of fish (lbs.) Quantity of fish (lbs.) Perfect Competition Short-run economic profit/loss for a competitive firm Profit maximization Loss minimization $ $ MC Total loss = $2,128 MC Demand= P = MR A ATC ATC 5.33 AVC Demand= P = MR Total profit = $2,500 700 1600 Carbaugh, Chap. 5

  5. 6 6 4 4 2 2 0 0 0 2000 0 Quantity of fish (lbs.) Quantity of fish (lbs.) Perfect Competition Short-run supply curves for a competitive firm and market Individual firm's supply curve Market supply curve $ $ Firm's short-run supply curve Market's short-run supply curve MC Supply AVC 700 1600 700,000 1,600,000 Carbaugh, Chap. 5

  6. 7 7 6 6 5 5 4 4 0 0 Quantity of fish (lbs.) Quantity of fish (lbs.) Perfect Competition Long-run adjustments for a competitive firm: effects of market entry Market Individual firm Price S0 Price and cost S1 Demand0 = Price0 LRATC A Demand1 = Price1 D0 500 Carbaugh, Chap. 5

  7. 6 6 5 5 4 4 3 3 0 0 Quantity of fish (lbs.) Quantity of fish (lbs.) Perfect Competition Long-run adjustments for a competitive firm: effects of market exit Market Individual firm Price S1 Price and cost LRATC S2 A Demand1 = Price1 Demand2 = Price2 D0 500 Carbaugh, Chap. 5

  8. 13¢ 12¢ 11¢ 10¢ 9¢ 8¢ 7¢ 6¢ 0 1 2 3 4 5 6 7 8 Million KWHs Monopoly Economies of scale and natural monopoly Hypothetical electric utility's cost curve B A ATC Carbaugh, Chap. 5

  9. 4,400 4,000 3,600 3,200 2,800 2,400 2,000 1,600 1,200 800 400 0 0 1 2 3 4 5 6 7 8 9 10 11 12 Quantity of diamonds Monopoly Price and marginal revenue for a monopolist Demand and revenue schedules for a monopolist $ Quantity Price Total Marginal (dollars) Revenue Revenue 0 4,000 0 0 1 3,600 3,600 3,600 2 3,200 6,400 2,800 3 2,800 8,400 2,000 4 2,400 9,600 1,200 5 2,000 10,000 400 6 1,600 9,600 -400 Demand = Price MR Carbaugh, Chap. 5

  10. 4400 4400 4000 4000 3600 3600 3200 3200 2800 2800 2400 2400 2000 2000 1600 1600 1200 1200 800 800 400 400 0 0 0 1 2 3 4 5 6 7 8 9 10 11 0 1 2 3 4 5 6 7 8 9 10 11 Quantity of Diamonds Quantity of Diamonds Monopoly Profit maximization/loss minimization for a monopolist Profit maximization Loss minimization $ $ Losses = $1,600 Profits = $3,200 MC MC A ATC A B ATC AVC C B Demand = Price Demand = Price MR MR Carbaugh, Chap. 5

More Related