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3 - Market
3 - Market
MARKET DEFINITION
• Consumers (households) demand or
buy goods and services. Producers
(firms) produce, sell or supply goods
and services.
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CONDITIONS OF MONOPOLY
MARKET
1. An industry with a single firm that produces no close
substitutes.
-He can determine the price (price maker) and accept the
quantity of the market or alternatively, he can determine the
quantity and accept the price.
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the industry.
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MONOPOLISTIC COMPETITION
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CONDITIONS OF MONOPOLISTIC
COMPETITION MARKET
1. Many sellers: there are many firms competing for the same
group of customers.
2. Product differentiation: each firm produces a product that
is at least slightly different from those of other firms. Thus,
rather than being a price taker, as the case of perfect
competition, each firm has low power of affecting the price.
3. Free entry: Firms can enter or exit the market without
restrictions.
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• Monopolistic Competition:
differentiation.
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PRODUCT DIFFERENTIATION
AND ADVERTISING
1.Product Differentiation:
A strategy that firms use to achieve market power.
Accomplished by producing products that have
distinct positive identities in consumers' minds.
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2. Advertising:
When firms sell differentiated products, each firm has an
incentive to advertise in order to attract more buyers to its
particular product.
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OLIGOPOLY MARKET
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CONDITIONS OF OLIGOPOLY
MARKET
1-EQUILIBRIUM:
to change.
2- EXCESS SUPPLY:
3. EXCESS DEMAND :
2- Price Ceiling:
1. It is a maximum price; below or lower than the
equilibrium price.
2. It is an obligatory price; not permitted to increase.
3. It is set to protect consumers.
4. The price ceiling creates a shortage (excess
demand).
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services.
demand.
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3- Price Floor :
• price floor is a minimum price, set by
government, above the equilibrium
price and is not permitted to fall.
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equilibrium price.
• Therefore: