4.1 - Imperfect Competition

Into to Imperfectly competitive markets

Generalizations:

  • MR=MC still maximizes profit

  • There will be profit

  • P will be higher than MC

  • Firms must lower P to sell more units

  • All customers pay the same P

  • Output will be lower than min ATC Q

    • Excess Capacity

Barriers to Entry

  • Economies of Scale - industry that requires large amt of output that only one can handle it

  • Legal Protection

    • Patents

    • Licenses

  • Ownership or Control of Resources

  • Pricing and Other Strategies