Economia

1. Competitive Market:
• Many number of sellers
• Maximize their profit
• Buyers and sellers are price takers
• Have to decide optimal quantityMonopolist Market:
• One seller
• There are barriers
• Maximize profit
• Have to decide optimal quantity and price
Oligopoly:
• Few sellers
• High barriers
•Have a strategy based on the opponent’s strategy
Monopolistic Competition:
• Many firms
• Demand is more elastic
• Advertisement is very important

Acompetitive firm is too small to affect the price, so it does not take into account the effect of its output decision on the price it receives. The marginal revenue ofa competitive firm is the given market price. Instead, a monopolistic firm takes into account that its output decision can affect price; its marginal revenue is notprice. Equilibrium output for the monopolist, like the equilibrium output for the competitive is determined by MC=MR; but, because monopolist’s marginal revenue isbelow its price, its equilibrium output is different from a competitive market.

2. “ A firm should continuously increase its output when it makes a profit”
Idisagree because a firm should continue increasing output as long as the profit is being maximized; meaning that the buyers must be wanting to pay that price for thatquantity.

3. a. There will not be such condition because they will not be maximizing their profit so there’s no need to produce.

b. It will be better toopen during both seasons because the profit make during summer compensates the costs and also the loss during winter, so the total profit will still be positive.