Question

In recent​ chapters, we explored different types of industries that firms may be​ in, including: perfect​ competition, monopolistic​ competition, and monopoly.

Under each of these market​ structures, there is a common method that firms use to determine how much of a good or service to produce. What is that​ method, and how does it differ across the different market​ structures?

Answer 1

Answer - Under each of the four market structures , the profit maximising level is MR = MC. All of the four firms have to produce at this level of output in order to maximise the profits .

But this does not take place in every market except the perfect competition. Except the perfect competition , the MR curve is downward sloping and demand curve or the price lies above it. This is done in order to earn the positive economic profits. Except perfect competition , where zero economic profits are there , all the markets try to earn the supernormal profits my manipulating price and output.