No Bull Economics Lessons

Macroeconomics & Microeconomics Concepts You Must Know

4.1 Perfect Competition Overview & Summary (Micro)

Everything you need to know about perfectly competitive product markets in four minutes.

4.2 Perfect Competition - Short-Run Economic Profit (Micro)

4.3 Perfect Competition - Short-Run Economic Loss (Micro)

4.4 Monopoly Overview & Summary (Micro)

Everything you need to know about monopolies in 5 minutes.

4.5 Monopoly - Elasticity of Demand & Marginal Revenue (Micro)

4.6 Monopoly - Economic Profit (Micro)

4.7 Monopoly - Economic Loss (Micro)

4.8 Monopoly & Deadweight Loss (Micro)

4.9 Monopoly & Consumer Surplus (Micro)

4.10 Monopolistic Competition - Short-Run Economic Profit (Micro)

4.11 Monopolistic Competition - Short-Run Economic Loss (Micro)

4.12 Monopolistic Competition - Long-Run Equilibrium & Excess Capacity (Micro)

4.13 Per-Unit Taxes vs. Lump-Sum Taxes (Micro)

4.14 Oligopoly Overview & Summary (Micro)

4.15 Game Theory (Micro)

Product Markets Review Sheet

  • Perfect competition exists when there are many producers and many consumers of a homogenous product.
  • For a perfectly competitive firm, marginal revenue is equal to price. A perfectly competitive firm produces where price equals marginal cost. A perfectly competitive firm breaks even in the long run.
  • A monopoly occurs when one firm controls the market.
  • Other things being constant, the most efficient allocation of resources occurs when a firm produces at the level of output where price (measuring marginal benefits to buyers) is equal to marginal cost.
  • In the long run, a perfectly competitive firm produces at an output where price equals marginal cost and also produces where average total cost reaches its lowest point (vertex). A perfectly competitive firm is allocatively and productively efficient in the long run.
  • Allocatively efficient means the perfectly competitive firm operates at the point where P = MC. Productive efficiency means the perfectly competitive firm operates at the point where P=MC=minimum ATC in the long run.
  • For a monopoly firm or any firm under imperfect competition, marginal revenue is less than price.
  • A monopoly firm maximizes profits by producing at the quantity where marginal revenue = marginal cost and by setting price according to the demand curve at that quantity.
  • A monopoly can make economic profits in the long run. However, a long-run economic profit is not guaranteed.
  • In the long run, a monopoly firm charges a higher price and produces at a lower output than a perfectly competitive firm with the same cost curves.
  • A monopoly firm will operate where price is greater than marginal cost, causing a misallocation of resources.
  • Oligopoly occurs when a few firms control the market.
  • Monopolistic competition is close to pure or perfect competition except that there is product differentiation.