MGCR 293 Chapter Notes - Chapter 7: Reservation Price, Variable Cost, Economic Surplus
19 Sep 2017
School
Department
Course
Professor
Document Summary
Nature, price and output decision strongly in uenced by the market structure. Market structure determined wether a manager will be price taker or price setter. The theoretical market structure in which rms take the market prince as given is the perfect competition. Market structure: system for grouping and analyzing markets according to the degree and type of competition among sellers. Monopolistic competition: when there are many rms and consumers (=pc) but each rms produces a product that sightly different from the products produced by other rms. Perfect competition: theoretical market structure in which rms take the marker price given. Each rm is so small that cannot in uence the price. Each rm has complete knowledge about the produce and the market. Market price in a perfectly competitive market is determined by the forces of demand ans supply: supply curve slope is upward to the right.
