i34inquish bet totn market p u i e a n d naRmal pru

Show how mi nid

lon PRLOd notmal puice 1S dei
O
nd f
Compefidion
Ans: Pere Lampelinn s o mwke m uksain
Uh mo Omd A l

Alim hamo90MAOs pheoduels a unuom

b umduunly he ma
dwwne huun matkU n@Ual

)HE PERIOD
Martk pAULe al pri tahih prw
pLocl s period o
mak Oeeuluon

Qn the ahu hamd NWmal

hih AON Ols e ln Long pg
 Ls a ume puad Awunt 1o make an adjustmn
y Ommacu
he domanmd

e(1 (1 OF DEMAND Anb SUPPLY

Harkt pruic L mainuuena
damond o CaAt
muh
dpedueli on ooesnal NL
AloNOmce n u ahor un
n he Conlayi lUmaumal pel
me Ununcad by
APplyJden cast d praducho
Cunls enty in he dlurminatian noMal prua
R) EAL AND PoRTRBLE PRICe
MArkel phUe u uat priLe wh
arluuslly pLONails in he markd a a padular
umu hal
Nanmal prute enly Uu puled puto
Aupp acytas 3ully lo gpariad demondl
Sn act, in Uu laLang pLdda, vRN buai he iupRy
amordl BoML diaturbaneu i

dmand md Aupoly may oke plac Auaky

CAAmA diseauulub riuum hus amal uit s

ke Lemaru mN omu

KINDS CF Gco DS
Haruke p i Can bea all lypes
ads pRLshable, duwrasle, hApeaoltahle.
amel alua nan praducable
-

uul nerummal pRUL anly dwrable

amd pHedweahle
RO AMD LOSS
OLCe,ALN TLOUMal
V matkt
Las may p N a i l
p t momal prakit and
uce LSaluoaysnklusine
ul TAMAYal

UYYal p s 1hare is ma
alnan e

LOmal
NaTURE CF EquILIBRIUM FROCE SS ES
Markat price is
A o e Temparary LQulibrnium uLL
Uw empaau omamd amd Che qivan åUppl

he Commaduy
NaMmal pki i he rAull d a Lang
P r od ptocoKS oaoustmand tuaeorn domond
omd uA amd Uuus a NOAulI slabe
Raulb Ln

)iAMURE CF CtIANGES
Morke phu chang
rm haL lu hau im

iAhablu c d s and Ln coa o gacd

hal
hat
camal h heardco ar a ang puulad t n
ho i h y makut phLe Am mLs C@mparsd

Rud Omal pMuLL is dabl pruc

phOvalima Lm h
h ida
Cm b
nplouncd Lheaugh o{alawing
 A

NORHAL
PRICE M
N

IME
ich w narmal pitc
S the diogroun, PN
indicalimg het
panl 6x aus
PRes a slable pUL while PM utNL
. aR CLALNUVL shausinghu tuueunrq

oluwu makalpMUL
LONG ERIOD NORMAL PRICE
hL udit inladucing

te 1ime loment in he dlominalian

pr undt pveel ampttilian g0RA Lo mincnl

arulish n e mualy AUd Mashall Je olieved

Lhol Jima lomunlhod Laaideable inluece
pan u doluminuue d pu Lang elecd
al puind Tama ohn auppy Ca -ul
Ocual ua thangus in denand eceLC
pMLaduuGn on b incMLOALd

applucauan o bal voi ob and ined jarles. Snatl,

all aclas or uib le ih U lang tun
OMumN
ull onibilily
adl ull
dilrinalun
o l l m a M c L

Aignu Cance in
 QLLaly acuve dlurmimomt
art uki a pain
ekel. alh
ACAAUS aung amol

malumg AUrAngth in h u
dolormunali
ohall
puce i s in 1is Cordenl hol
66
ume, eauD
Loill be nuwne
doami.
Apply io pMu
meudn Jhe quulibruum piu Ual pN als in 1h
Lon un kmoon nONmAl prute
dcadmg lo Urcd Marholl, nwma
uc Uu pri hch anolsloprovail in he
markd ohn uL ime aivn La h acs
dmandl nd
uRey Lo aclyual 1hemAlwes. L
ob ov Uw maumal MUCL The ktum wu

MUUmaL
OmOL
Pa und Ue prie blla
, im wUl
in U
ROUn
LvAls.
L Mun
29uuilibtuum, wu i l s nuulh
Aup mamal poL mo La.
h UUm
pril mA up
memal pLiL and Ou
olimmunalud n h
ang u n . ha Leng uun
QJulib Num dauu
unds peyul Compdlun
Lallaunud
CLnduUan
Prui LMC LMR= LAC L AR
 Aia qomatiC epttnlation:

LOSS
uPR N DRAL
PRofi1

RAR P AR-

OUTU

-LAC

LAR-LH

M
u1PUT fiq Cii) OUTPUT -

INCUSA RH

CevCApendng 1o 2ulbum
Jn q
MC Culs MR KEm bclao and HE = NR
AcLntE white

AR ME

AR >AC Sparn aA mal peepl prcwails

mWuMal pltal r unul
. E u
Jaled a n v na'mal p r a t = PR1E

his iceit l
ill
l allal m uema nl macktl
Lalal
aL AApy Cammaduly will incnetac du is
CLAlAa mminimun
oirh priLe ill all till it
 ny nexmal proNuls
AC uhch
COMmccdidy wl mesciaA
uts,
Welal aupp Uums,Ap Motmal pral
dut le (lhe eniby
liialud _in he leq_Pt
t a u u u i u n

ii) UCLOrelum9

0mcd hLnC
AR CNN
ACAUUNC lius
ptul t U , De
PRME eprLAUmls tn tol LnA tm he L
Lang
moskbl ,Thva,
makuMG
CaAL9 tedtuluen in lhe Lelol4PDLy
, fuc noimal preil 1o he peodun

t duu lo he i l eold m a

q Ciii) OP is Wu i maumal A i eLLen

Amd lng
Ouaol demand
RSUDd Aep Cwne 8S @nd thu p i t

0.cepitd b te Uum

g t y , f i s hu uilubrum paunt an
OP
iUe mcmel prie al ulhieh e ellesEng
CCdlndna
ARlustud
dh pru Lune L alnn he HR anol AReuwwA
. ' L HR LAR

t CP prie ine ACLS

e a LAC LAR, hv u
Lal pit f
Las. nly Unm.al pKeld
ptevars.

4 inally LMC Minenuum LAC=LAR =LNR = Diue

 frrem Lhe abeve analynu cam o Lencducdtel

het Und Cmpeluluon Canmat

pRNel
acheN omg NLUn ul all Lhes
quilibriuum
OCNLULLS CMLcd RALaliaLcd lh pr .

tHe
tCmne the impac o ntay and exit tm Grn
T
7002
Ccmpetive ndus1ay.

Ans Jm Compelutive marckls he Lmhave the

and ext
iberyto nler he CGmpetive indusluy
.In he shond-rL
em he , in he lng uun

Mm MAY RDrtnAupr
mamal prtot,, nOUmali
al qLilibruus
prell
Lhe g NUL
in
lova Jhe erib and i t d
Ove ntm
limunalos he AuA mamal pol md Leses anc
LONmal prol phwauls. he umpacl oenby

Omd i m he CMpctitve

ndusly bellu Undtiload lulth

Ahe help ellos Lhg dagtem

 MC
N

AR
AC
AR
AR

0
OUrU1- OU1PU1

)NDUSTRY
fig

inclualy

ig ) he qulibium
is deRUelid
cune
AhoOn uuhve he demand

cutMe s VaLabl
as Coslant and he aupRpl
1he AUlnaluen diut lo long N
aC dng

n h ang uu Och rm utull be An

Culibruwm 'al hai lenel d oulpul

LNC LHR tekes and He tu h1h. IulUen ror
and al he anie ame AR LAC at tls

Ununum Nel

he M Quilibtu

L wkenC he LA 3 al t
ptinl
MUmLm OP puce L
poclUtLA OQ
CAl 1A conumodily and eor na mal

Inhu ahanl Nun Aupeht ndumal prot

 wned okn AR A In iq , al P
and h
prLCC AR ts above AC CAAAN

nanmal projit. his aluprs

ALRc
and he
malpRet
mal
allrars he nedNm
he induuly. Ihis
ns um cotuld
uttuldA ad lo intaA
in ppl shifing
indul y NL 3,S, eutanels 86
UN
wiul be 2oned doon o 0P where

an a al Pte prawaile hus,Lhe anby

he ims Rlimeuals i h ALLpo nomal ptoil.
pite OP2 , Lhe am will i d u t
udgain
sotlpd to 092 and a 1hiu oel h e iNm 3

L Aine A aboNe OMALA

int D AR

Sto m able lo u l a i n AKu

LRAALS ill he indluity aupply will ku

RColutd and indusb ALLPP LLrM S,S to
Lo 8S

ttkieh pnire oil riat lo P hnetqiltbtunum

will be Kesltd al he MLML painl oLAC

all 1he. utms orll

lptt0 lov oil he lininaltd

duLb nut h
 h e n o m i non
ho n
1 i lue a l prtoit 1s a

Lthdc rkc Conipatiion ? xplain oluteen. lalal

Pecut h dilnn belh
aned alal cet C) .
Preolet
teugntue (1R).
phuncrLRhOH .
henl ttun as u t l l
Lsn
m m
hc ah erd A p r tive

AUp 2LCLal phot, Omal e

AR C w )
utn icurnleAs WJhon prutt
Aherdnn Lhe
he
qrcealw han AC e in h
AALpU nctmal pleo
(opcltwe tCmA
hech is l l csirq dia

DP Nor EL
fROfIM

OUMPU1

gnh abav he Ceipelll

al paint , hur
im

Lauidubuum prle (or AR) HE OP

HR and
N
H S . Jhee«/ace )
AC , 1
Lalal aupeh notmal
 JdCCuN {hi Aupc 1omal pr e j l ts /2lUeka,

linenaltd in he 1 h e lerg tun

tnq
NUma Pcaut pieNatls.
n l o Lhe 9errus
anistu ng LaMm AuRs nOmOal pre

uull tnlur U ind in lhe hope oi

lulhen
id usby he lelal Auppty tulprt
te he Pccl utl ay allirq

dlaniuio udand ultinattlts qent

nonmcul ptct Pvail:
AC tu

dgam akeniy
t Ue imdltsly im h lng N , lalet upp

nd piti inctaa4 he AC uve he

ord
d nl tan Tomqtnl lo AR tutve tnd

1 ndanu shcu hal nly n0enial prrejil

wails. Jhe 0rmad polit tanntel by precliy

patiiv pLAket is houn in Ucolleotnq igrAm
M

At 1
 Lhe ab di i a qM OLMM

. luhruum
quilbre m paind f C = MR and
OP his Rauidb M m

AR MC =MR AC
Since AR AC ral PAGL ftovads

AL 1hel prLelit s holh a hodhun

OU phen MenN
 cmpeition he
an
aim unde Monopolis tic
ptoit ma/TT D
20Mningmoke thannohemal

ong tatn equlibrium

mhe ng perOd
octilton an
9 Cttp umdar enepollalit COmC

m amal ptout.
Since uo vma
a n KUL
Can nla nd Loss makimg uems
melhor AuA
rom the gaUp 1hoto.
Omal pMo Ums

ndoy inlo 9eup un he long nun ,

ome he eNiAlmg

naNmalpreit Un thahard uth hel

gotms,The elat otulpul toill

nby he t
So he AR U N o 20ch fnm

Nel amd AC ume

ull nd tlimalily it ill oe Lamgunt

o AR oich oilu anmg nly noNmal

pret n vlo lwng

Las in he ahon pkod and 1hus may

Mem heia m Aueh aAlualan
he AR will dhisl lo. upuuand louel
AtLpply will b MaduLed ahd
ull go up Uualuly a poalian
pLlce aull
 come uthem AR is angenl 1o A amd the u m

0 nemal PRoit

In he n he pxire otilpd
rdividual irm is dolmine

by the Aame
ghnal principle apialily oMR
and MC an Lhe s h O r t R r L O d L W a m y tutuh

hu
he squluly HR nd MC, analhn impetant

eetlon o ng un Rgnilikrium is LAR =LAe

MC

LA

AR

R
M

Cu TPu - fig i)

AR is gtialth Lhan N
CARAC) Apr nemal ptoNulseaxnocd whith
d8 AhQONn b h ahadid u l tm h e

Leng ttth th eniny n emi , n.

Ome lme
bccemes fangenl o AR AAMNM hieh is aha:On m

hg 6) ACpaint PLAc AR in
 M mal.
heneoncle inm ta
LAR - LnC
pue bby uliling 1he
Ctnelilien

a n d dLageAmali
t om he aone anallual
AUmmAM id hal a Nm tUhdu
iy tmal
LO Mopolisluc omptlu tian

neMmal plMULe
ptoit hou ng
i n ine .
Monb polis tit. e
ompelitio Aic tivng uish na
r 1cnd do be amul}
Oeci ompetution. (thy dos
pritmankei ctm? xanine -e ehmanee a a

nmonopo usii( all ompeidive inducty onthi poin1 i

nomit tiey

Ans momapolulie campeliliðn a

Ntor
ChambRAiin al ndhen
pARrlecd bu kpneMEs

p campelidian ra menapalxisb in htht

Hal tuornld amel tuhalaelually inisl is hh
bltndung he uto . n Lh oaAcls A e

Clhamberlin Monapaluie anpelulinr i a challenge

Lo radiienel vitd POLnl oLCRmtmisk hal

mandpOA ati allennaline
Arel tampelilin amd

nd 1hal indiwidiual pus ae 1o hc Raplancd

rms dulhu he ane ax he olhor

CnlaslAl hele meal2cene mut Allunllo

CmpaAlls balh rrtel cOmpelelicon CUnd

hus mOnepolalie Canpclutiou Ne c a loAhal

ompeltluer n ohich is
pdetl
chartarlnatd . h Altnce o veral ms
bldules
Atling ohieh aC

cch olhen nd 1hehe ee nlhy and n c

ul d (ho ins in he
he mawlel
 PeRfe CT (eMpt TI 1ory. v) onNoPOLISTi
PiC1InNC110N B61LE EN

(oHRET11ON
sach m pr odiuuy
tUndAnd stxed topeluten AO hal
t o d u l

0datlls La hamegneALUA
buyeh as A C n ce
ndiveltal
hoks
is prceltuel
n he canlrany, 1hene
merepeluslie sompd hon.
di ren1cluwn ndN
bul nal udnlienl.Jhoy
PMaduel Aimila

autbtilul Jhydh e , tach

laa
ahen oAigm alaut o@uhamd

packi amd

nd perJetl cmpali tion

dlen mneel bM chcts o dmand and
indtialy' ktvxry Mm

o All ls psdul at hal prue. No

indiwidual im AM hc pite ky ls
Dudn aclutn ha lo Aimply adjusl
LLLul t Ihal hus ve m is
pur
aanily - adialer
a pMice

INRM

umdin monop@lislie (dmpilidion

hocare hvr DAAC. vactoON in monopols

lic Conpetiluon
(i) SaAlimg cA s abatml in RUeel tonmptihio
AUnce hene
AtLlim9 Pe
9acke ulhone ane mognatA
PAOdc ls
he m an Aclt a the rtuing iarkod puutt
Uuant pradtuel

Bul wnd monopolualir empelu ti n

AChtCe Lhe preducl is daeranualed, Alling

Rntual1 Rush up heAlls,

C) nd psretl asnpaluluan a inm a 9

t h hainental damand LLV (AR cuNe) haesin.g

pAnecd inenule slaaletly o

t demand .

anmand

wuws is pU ly
lasuc un.olsrt l

mpe lulion
is
uxtd
D D(PR)

(m 1he n Aand The dcmmamd

mo eeluslte cPpcl1ion
laalue alopnnq tohich

Anplios 1Aal m ull Aae 1o Merduer.

he praclue Ao incneeae ls Aell,
 by alleeling
Ame ALAlomoAA
Ed1
o campe lulors
ONLde the,lala b(n)
da nal cdutt.

OUeU1

HR AUnC eath
( nelur Rirel cemp:1tluan AR i
preelucl
unil 1hu
wnt ond a.oelilutnal

Anld ai fhe

(AR) MR

h akoue higune AR And HR Au rue

CO-imLde nlo the
Laking
pkin haninanlal hapt.
dagaunal hu mnepoltolit ampaludion
AR HR

HR
 n lhe qune AR esabove HR U
inmpiying thal AR HR

din Rrad camptuilicn al cqulibriumn Awd,

PM
h duagram
fis Lha quilibrwm
prin bteaat HR=N
al thes pinl
MR ME
HC HE
OP
OP HE

OuPU

ut tund mene pa uslie eptllion al

cuel
n Thediagom
N C

qulikbrium potnt
HRM
NE
P oP
OP HE
P P MC

NR

Ouirun

vi) nethu d rtnte hcluttn. he luto ma'cke

Alluuluens telales lo htin Aig h e dn
ms tndA piheel comerulien an
 Lheeptinmtum AUc and pradute 1htu full
AC
LHC: Minimum LAC
AatytcaLA PUCO

ul tdt monopelisi npatiluon, The kirtny

los 0nd'po4
erte c han he oplimumAe
uue ibdnuar o
tapatnly
taust Ihe AR
altpimq nd tamnei be Crmgenl
tOVL al tls mmumUMm peinl.ang
aLLibNU Um achiwed
LHG
at i Leuteal inu

penl LAC u
ane hce

miku MANs

taputly and Ahhe -LNR-11AR

Uum
optimttma p i l oM
thich it maAl
M

ketn aulpul 1h OwPO1

ailibMLtm eelrul
O pradtLd ha
HL&thmg the lowesl LAC

MAMUmum paint 1,
oLAt cut, indicatug
1hal HM is tht
LAK
nCUA Cpetul oich

Ls nel ulilund LMR

hu hAM Lnloh OUPO1

mENapeluullt ompelultwn
 MCNO PC LISTICALLY ctIPE TITIVC INDUS1RY fROM HC 4E£

OF EconofIC frtuenc7

monopolalue COmpltion
A m a mumbu
aalogc neo 1h
tetaa lages aN disttUmtd belnes
SeL INGCoS1
Onc e he imporLanl utaslage monopaliulir

ce mpluluon is thy incumimg RNpnelulime

cOmpetiliws adenuatmenl . 6 iums nptndilut an!

packim, reloau, lavtw le and on

tike he 1,V Roudis , ha tintma , ha ntstpapi

p A O Y p t e d u l alierenialion .dll
CRLl
ALh Mptncltluru s Antially uaalul

t PRoDvT DIPFE RE N1IA ÍION

alhan uLasle opAaduclian is he

phaltuctton nortelius predul ashich inch knm

his is dene
rnaing aiiriol ax
AmaqMWY lo he
dieonees so a oliatinguuah
4tlllo 1hoat Jhis
o noihen.his
isdont by changung he celou, dutm
Rackinng <l. o h e adme preeucl 6 1he same
prtducx. his tacl To utaolage. d

nd lA e
(i ANgPORTATION (OS1 pnddiitl in
DHadutt lnus fo arll his
natkel
mankc talhoe 'than
1he
 01C0U manujneluune. he iwalNs
plato
app.omtnlly
vapMl_cosl his L

Lastn.ceokOLUNCs
i NEFiCIEN{ RHS tit e mpslilunn
Thve L a
pcltalir
Uncd t comptt
ms n
a g umbtr ointitnt
outR t prui
neete iNm utill hane lo
oNt

tu wttaqe cnal Rul am Unuticnt

ve may mal br in a paitinn lo lout
ANALAcane cosl (AC) hu uch a
0md pN LC
Uu. o ceniumu n oisk em 1he Altung

hin cUalomus 9 htuo

Amall Anil ahepa in loun tahich

dpincl upn 1he geadoill, htit cuLlom

oho diue o
iciont vema tuith atl
Lhu ABT pkadud al a toutb phice tnislne
ALLch Untleutnl AOal atdale.
VLess HAN OP 1t HUMS1ZE
A hums und nonopalualie tenpati

pltmttnm ap.octly od all cha

hight hon CCnpdltue RMR.hi

Lmelrtalu
tutaaluse eAwcstam, {ho pn
Rmmundy.