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Perfectly Competitive versus Monopolistic Pricing:

Possible Long-Run Price Under Monopolistic Competition

Monopolistic competitive
solution: PQ
Competitive solution: P`Q`

t
MC
s
o
C ATC
d K
n P
a
e C
ci P′
r D´ (MR´ and AR´)
P

B
AR
MR

0 Q Q′ Quantity
36

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Possible Equilibriums Under Perfect

Competition, Monopoly, and Oligopoly

$ $ MC
MC

ATC ATC

AR
and
MR

AR
MR
0 100,000 Q 0 500,000 Q
Perfect Monopoly or
Competition Oligopoly

37

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Competition Among Consumers

Monopsony
A market structure in which there is a single
buyer (e.g., rural area granary)
Oligopsony
A market structure in which there are only a
few buyers (e.g., tobacco market)
Monopsonistic competition
A market structure in which there are many
buyers offering differentiated conditions to
sellers (e.g., toy manufacturers)
38

Imperfect Competition notes

Imperfect Competition notes basic of theories economics

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