Market structures and the objectives of firms
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Last updated 2:27 PM on 1/2/23
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6 Terms
1
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Describe/ draw the spectrum of market structures
Perfect Monopolistic Oligopoly Monopoly
Competition Competition
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< ------Lower barriers to entry, more contestable-----------
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\--------- More market power, less efficiency -------------- >
Competition Competition
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< ------Lower barriers to entry, more contestable-----------
\
\--------- More market power, less efficiency -------------- >
2
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Traditionally, what is the most important objective of the firm?
Profit
3
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Define profit
The difference between total revenue and total cost. It is the reward that entrepreneurs yield when they take risks.
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P= TR - TC
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P= TR - TC
4
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At what point do firms break even?
When TR = TC
5
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At what point does profit maximisation occur?
Where MC = MR
6
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