Market environments e Dominant Firm Many firms, but one much larger than the rest. The large firm's decisions affect the payoffs of each small firm. Decisions by any one small firm do not noticeably affect the payoffs of any other firm
Market Environments ◆Dominant Firm: Many firms, but one much larger than the rest. The large firm’s decisions affect the payoffs of each small firm. Decisions by any one small firm do not noticeably affect the payoffs of any other firm
Market environments ◆ Monopo| istic Competition(垄断竞争 ) Many firms each making a slightly different product. Each firm's output level is small relative to the total Pure Competition: Many firms, all making the same product. Each firm's output level is small relative to the total
Market Environments ◆Monopolistic Competition （垄断竞争 ）: Many firms each making a slightly different product. Each firm’s output level is small relative to the total. ◆Pure Competition: Many firms, all making the same product. Each firm’s output level is small relative to the total
Market environments Later chapters examine monopoly, oligopoly, and the dominant firm This chapter explores only pure competition
Market Environments ◆Later chapters examine monopoly, oligopoly, and the dominant firm. ◆This chapter explores only pure competition
Pure Competition .a firm in a perfectly competitive market knows it has no influence over the market price for its product. The firm is a market price-taker The firm is free to vary its own price
Pure Competition ◆A firm in a perfectly competitive market knows it has no influence over the market price for its product. The firm is a market price-taker. ◆The firm is free to vary its own price
Pure Competition .If the firm sets its own price above the market price then the quantity demanded from the firm is zero If the firm sets its own price below the market price then the quantity demanded from the firm is the entire market quantity -demanded
Pure Competition ◆If the firm sets its own price above the market price then the quantity demanded from the firm is zero. ◆If the firm sets its own price below the market price then the quantity demanded from the firm is the entire market quantity-demanded