Social Sciences and History / Unit 13 SSH 1240 review, 2 to 3 minutes
Four Structures on One Line: Sellers, Products, Entry, Pricing Power, Efficiency
The idea
The exam's market-structure item is answered by one table, and the anchor's three chapters fill it column by column. Sellers: perfect competition has many, thousands; monopolistic competition many; oligopoly a few; monopoly one. Products: identical in perfect competition; differentiated by feature, location, intangible or perception in monopolistic competition; either in oligopoly; unique in monopoly. Entry: easy in the first two, so profits attract entrants and losses drive exit until economic profit is zero; blocked in oligopoly and monopoly by economies of scale, resource control, legal restriction, intellectual property or predatory pricing. Pricing power: the competitive firm is a price taker facing a horizontal demand, with marginal revenue equal to price; every other firm is a price maker facing a downward-sloping demand, with marginal revenue below price because each extra unit lowers the price on all units, the monopolistic competitor's demand the most elastic of the three because its rivals are close. The rule is the same for all four, produce where marginal revenue equals marginal cost, and the difference is what price that quantity fetches. Efficiency: only perfect competition reaches both, productive at minimum average cost and allocative at price equal to marginal cost; the others produce less at higher cost and price, and only monopolistic competition buys something with the loss, variety, which the anchor leaves as an open question. Oligopoly is the structure where strategy enters: a few firms can collude as a cartel to act like one monopolist, but each gains by expanding output, so collusion tends to break down, and explicit collusion is illegal; the prisoner's dilemma, a game in which cooperation pays more than self-interest yet self-interest tempts, models the bind, and the kinked demand curve, rivals matching cuts but not rises, models the stickiness. Two firms make a duopoly. Everything between the two extremes the anchor calls imperfectly competitive.
In practice
Many, many, few, one; identical, differentiated, either, unique; easy, easy, blocked, blocked; taker, maker, maker, maker; efficient, then not.
Where people slip
The line is the course's arrangement of the anchor's three chapters, and the Micro course carries each cell at depth for a learner who needs it. The variety controversy stays the anchor's open question, and oligopoly's game theory is stated as the anchor states it, a model of the bind rather than a prediction of its outcome.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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