COMM 296 Lecture Notes - Lecture 1: Monopolistic Competition, Oligopoly, Fixed Cost
Document Summary
Lo 14-4 describe how to calculate a product"s break-even point. Breakeven analysis and decision making: tvc = vc/unit * quantity, tc = fc + tvc, tr = price * quantity. Break-even analysis = technique to examine relationship among cost,price, revenue and profit over different levels of production and sales to determine bep. Lo 14-5 indicate the four types of price competitive levels. Competition: there are four levels of competition monopoly, oligopolistic, monopolistic and pure competition, monopoly = one firm provides the product/service in a particular industry. Restricts competition by controlling an industry; can be considered illegal: oligopolistic competition = occurs when only a few firms dominate the market. Firms typically change price in reaction to competition to avoid otherwise stable competitive environment (ex: soft drink market) Can result in a price war = occurs when 2+ firms compete primarily by lowering prices.
