The study of the nature and functions of product markets includes production and costs, and market structures. This includes an analysis of the short-run relationship between diminishing returns and marginal costs, and of the relationships between total, average, and marginal costs in the short run and in the long run. The concept of cost minimization is also introduced at this time. The fourth area covers the behavior of firms in different types of market structures. In covering perfect competition, the course focuses on determining short-run and long run equilibriums, both for the profit-maximizing firm and for the industry, and on the equilibrium relationships between price, marginal and average revenues, marginal and average costs, and profits.
The study of the nature and functions of product markets continues with a focus on imperfect market structures: monopolies, oligopolies, and monopolistic competitive environments. In considering the market behavior of a monopolist, you will identify and examine the sources of monopoly power and understand the relationship between the monopolist's demand curve and its marginal revenue curve. You will learn how the monopoly's total revenue changes along its demand curve as price varies. Having learned the behavior of monopolies and perfect competition, you should be able to compare a monopolist's price, level of output, and profit with those of a firm operating in a perfectly competitive market. By paying particular attention to the concept of allocative efficiency, you will learn how and why competitive firms achieve an efficient allocation of resources, whereas monopolists do not. The concept of deadweight loss is a good device to show the efficiency loss due to monopoly. The model of price discrimination provides another dimension of monopoly behavior that you need to learn and understand.
In covering oligopoly, the course stresses the interdependency of firms and their tendency to collude or to form a cartel. With a simple payoff matrix, the basic game-theory model is used to enhance a your understanding of the interdependent behavior of firms in an oligopolistic market and identification of dominant strategies.
Finally, the course considers the market structure of monopolistic competition and highlights the importance of product differentiation and the role of advertising in the behavior of firms. The course then proceeds to examine firm behavior in the short run and in the long run, and the existence of excess capacity and its implication for efficiency.
The study of the nature and functions of product markets continues with a focus on imperfect market structures: monopolies, oligopolies, and monopolistic competitive environments. In considering the market behavior of a monopolist, you will identify and examine the sources of monopoly power and understand the relationship between the monopolist's demand curve and its marginal revenue curve. You will learn how the monopoly's total revenue changes along its demand curve as price varies. Having learned the behavior of monopolies and perfect competition, you should be able to compare a monopolist's price, level of output, and profit with those of a firm operating in a perfectly competitive market. By paying particular attention to the concept of allocative efficiency, you will learn how and why competitive firms achieve an efficient allocation of resources, whereas monopolists do not. The concept of deadweight loss is a good device to show the efficiency loss due to monopoly. The model of price discrimination provides another dimension of monopoly behavior that you need to learn and understand.
In covering oligopoly, the course stresses the interdependency of firms and their tendency to collude or to form a cartel. With a simple payoff matrix, the basic game-theory model is used to enhance a your understanding of the interdependent behavior of firms in an oligopolistic market and identification of dominant strategies.
Finally, the course considers the market structure of monopolistic competition and highlights the importance of product differentiation and the role of advertising in the behavior of firms. The course then proceeds to examine firm behavior in the short run and in the long run, and the existence of excess capacity and its implication for efficiency.
The Essential Questions
1. Define and differentiate among different businesses.
2. Define the concepts of firm and industry.
3. Define, explain, and calculate total product, marginal product, and average product, and describe the relationship among these concepts.
4. Define and interpret production functions.
5. Define and differentiate between short run and long run and between fixed and variable inputs.
6. Define the law of diminishing returns and explain how it is depicted by the total product and marginal product curves.
7. Explain the relationship between production and cost.
8. Define and differentiate between explicit and implicit costs.
9. Define and calculate cost graphs.
10. Calculate and define fixed, variable, average, marginal, and total costs, and explain how they vary with the level of output in the short run and long run.
11. Define and explain economies and diseconomies of scale and constant returns to scale.
12. Define and calculate the least-cost combination of inputs to employ for a firm.
13.Define maximization of profits.
14.Apply the concepts of marginal cost and marginal revenue to determine maximization of profits.
15. Understand and apply the rule MR = MC.
16. Understand the concept of minimization of losses.
17. Define the shutdown criterion.
18. For pure competition:
20.Construct marginal revenue/cost analyses to determine price and output.
21.Determine the short-run and long run equilibrium for monopolistic competition.
22.Compare and contrast pricing and output between and among the firms.
23.Compare and contrast the demand curve and marginal revenue curve.
24.Compare and contrast allocative and technical (productive) efficiency among the firms.
25.Compare and contrast product differentiation among the firms.
26.Compare and contrast the degree of price discrimination among the firms.
27.Compare and contrast the effects of government regulation to make it more efficient.
1. Define and differentiate among different businesses.
2. Define the concepts of firm and industry.
3. Define, explain, and calculate total product, marginal product, and average product, and describe the relationship among these concepts.
4. Define and interpret production functions.
5. Define and differentiate between short run and long run and between fixed and variable inputs.
6. Define the law of diminishing returns and explain how it is depicted by the total product and marginal product curves.
7. Explain the relationship between production and cost.
8. Define and differentiate between explicit and implicit costs.
9. Define and calculate cost graphs.
10. Calculate and define fixed, variable, average, marginal, and total costs, and explain how they vary with the level of output in the short run and long run.
11. Define and explain economies and diseconomies of scale and constant returns to scale.
12. Define and calculate the least-cost combination of inputs to employ for a firm.
13.Define maximization of profits.
14.Apply the concepts of marginal cost and marginal revenue to determine maximization of profits.
15. Understand and apply the rule MR = MC.
16. Understand the concept of minimization of losses.
17. Define the shutdown criterion.
18. For pure competition:
- Define and explain the conditions under which it functions.
- Construct marginal revenue/cost analyses to determine price and output.
- Determine the short-run and long run equilibrium.
- Identify the short-run market supply curve.
20.Construct marginal revenue/cost analyses to determine price and output.
21.Determine the short-run and long run equilibrium for monopolistic competition.
22.Compare and contrast pricing and output between and among the firms.
23.Compare and contrast the demand curve and marginal revenue curve.
24.Compare and contrast allocative and technical (productive) efficiency among the firms.
25.Compare and contrast product differentiation among the firms.
26.Compare and contrast the degree of price discrimination among the firms.
27.Compare and contrast the effects of government regulation to make it more efficient.
Lessons
3.1-_revenue_and_profit.ppt | |
File Size: | 972 kb |
File Type: | ppt |
3.2-_production_and_diminishing_returns.ppt | |
File Size: | 2199 kb |
File Type: | ppt |
3.3-_costs_of__production.ppt | |
File Size: | 7980 kb |
File Type: | ppt |
3.4-_long-run_costs.ppt | |
File Size: | 1715 kb |
File Type: | ppt |
3.5-_perfect_competition.ppt | |
File Size: | 3436 kb |
File Type: | ppt |
3.6-_perfect_competition_in_long-run.ppt | |
File Size: | 3997 kb |
File Type: | ppt |
3.7-_perfect_competition_and_efficiency.ppt | |
File Size: | 2684 kb |
File Type: | ppt |
4.1-_monopolies.ppt | |
File Size: | 5509 kb |
File Type: | ppt |
4.2-_regulation_and_price_discrimination.ppt | |
File Size: | 1333 kb |
File Type: | ppt |
4.3-_monopolistic_competition.ppt | |
File Size: | 4875 kb |
File Type: | ppt |
4.4-_oligopolies.ppt | |
File Size: | 5056 kb |
File Type: | ppt |