· The crucial factor is the demand for the firm's output must be negatively sloped: the firm becomes a "price maker." The extent to which a firm is a price maker (i.e. has market power) is partially determined by the price elasticity of demand in the relevant price range. Note that when the seller selects a price (price maker) the demand function determines the quantity that will be purchased. · The conditions of entry or barriers to entry (BTE) are also important determinants of market power. If there are significant BTE, a firm or firms may be able to sustain above normal profits over time because other firms are prevented from entry to capture the above normal profits. Monopoly is the market structure that is usually associated with the greatest market power. · The monopolist produces a good with no close substitutes(increased probability the demand is relatively inelastic) and there are barriers to entry.
sta bp id e va S e o bte rvikuskõ i a in e va h e
This suggests that the demand faced by a firm in a monopolistically competitive market is likely more elastic than in a monopoly. The elasticity obviously depends on the preferences and behavior of the buyers. The negative slope of a firm's demand function in imperfect competition results in a different result than in pure competition The conditions of entry and exit to and from a monopolistically competitive market are similar to the purely competitive market; there are no major BTE. · Entry and exit are relatively easy. The relative ease of entry/exit makes the long run results of an imperfectly competitive market different from a monopoly. Price Discrimination - Question Does price discrimination raise or lower profit? Price discrimination selling the same good or service at a number of different prices. - Answer Price discrimination is a marketing means to increase economic profit
annaabi.ee 
