Figure 1 illustrates price and output determination under price discrimination. The monopolist sells his product in two markets, 1 and 2. Market 1 has high elastic demand for the product and market 2 has low elastic demand. Accordingly, the demand curve in market 1 is D1...
Equilibrium Price Determination in the Market Period and Short Period Under Perfect Competition Figure 1 The Market Period Price Determination The market period is a very short period in which the supply of a commodity is fixed. The variations in demand determine the price in su...
Financial EquilibriumProfitabilityPrice outputThe optimization of profits and profitability of a product or firm depends on the perfectness in arriving at the equilibrium among the costs, price and volume of product(s) of a business. As the volume and price of product are inter related and they ...
Why is society worse off under monopoly than under perfect competition? Explain why price regulation of a monopoly in a contestable market will not correct a market inefficiency. Explain why monopoly is not a preferred market system. Explain the output determination in monopoly ...
This paper follows this latter route; it presents a model of a firm's price and output decisions under uncertainty which produces the typical behavior of monopolistic competition even in a homogeneous industry. The model yields insights into the issue of the price and quantity effects of nominal ...
Monopoly competition marketoutput and price determination (problem sets) Multiple choice 1. In the short-termequilibrium of monopoly manufacturers, () A. The excess profits mustbe obtained B. The manufacturer must notget excess profit C. Only normal profits D. Excess profits, lossesand normal prof...
Under perfect price discrimination, the marginal revenue curve coincides with the market demand curve, so the monopolist will also produce until marginal cost equals price. This increases profits shown by the shaded portion of the graph #2 below. Allocative efficiency is also maximized when price =...
This paper offers a simple model of the price mechanism in markets where buyers take prices as given and prices are set by sellers, as in most consumer markets. It explains price competition by arguing that a market price goes down if—and only if—a price cut appears profitable to a firm...
Price determination under dumping is based on the following conditions or assumptions: 1. The main aim of the monopolist is to maximise his profit. He, therefore, produces that output at which his marginal revenue equals marginal cost. Since he sells his commodity in the domestic mar...
We consider a game model of a trade of one good between two firms, where both players first set prices and then choose quantities to be traded at the other player's price. Investigating the outcome yielded by subgame perfect equilibria, we find that in a class of games called 'regular cas...