1. CHAPTER 7: MARKET STRUCTURE: MONOPOLISTIC COMPETITION & OLIGOPOLY

2. 7.1 Characteristic of Monopolistic Competition 7.2 Short-run Decision: Profit Maximization 7.3 Short-run Decision: Minimizing Loss 7.4 Long-run Equilibrium 7.5 E conomic E fficiency and R esource A llocation Chapter Outline

9. Profit ??? SUPERNORMAL PROFIT

10. Loss ??? SUBNORMAL PROFIT

11. NORMAL PROFIT?

31. Payoff Matrix for Advertising Game: (A,B) Firm A Advertise Not Advertise Advertise Not Advertise Firm B Dominant Strategies A A B A A A What strategy should each firm choose? Game Theory A B A B A B 10 , 5 15 , 0 10 , 2 6 , 8

37. Firm A Advertise Not Advertise Advertise Not Advertise Firm B Nash Equilibrium A A A A B B B B What strategy should each firm choose? 10 , 5 15 , 0 20 , 2 6 , 8

42. Prisoners’ Dilemma Firm A Low Price High Price Low Price High Price Firm B What strategy should each firm choose? 2 , 2 5 , 1 3 , 3 1 , 5

51. Comparison for Market Structure Characteristics of Different Market Organizations

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