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    ME Reviewer Finals

    Uploaded by

    katrinacalucin6
    Reviewer

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    MANAGERIAL ECONOMICS 1st SEMESTER

    |FINALS
    |Ma. Teresa Hidalgo S.Y. 2023-2024

    MARKET STRUCTURE PERFECT COMPETITION


    1. Large Number of Buyers and
    MARKET Sellers – Each buyer and seller is so
     Refers to the place where the small that he cannot exert any
    consumer and the producers buy influence in the market.
    and sell products at an agree price. 2. Homogenous Product – These
    products are identical.
    MARKET STRUCTURE 3. Free Mobility of Resources – A
    business under this market
     Refers to the degree of competition
    condition can move in and out of the
    in the market for a particular
    market at any time in response to
    product or service.
    price changes.
    ELEMENTS OF MARKET STRUCTURE: 4. Perfect Knowledge – The seller and
    the buyers have complete
     Numbers of buyers and sellers – This
    determines the degree of knowledge of what is the ongoing
    competition. More buyers and price in various parts of the market.
    sellers mean more competition. Example:
     Nature of the product – the extent to  Basic needs – no need to advertise or
    promote specially the agricultural
    which the product is standardized.
    product sold in the market regulated
    2 KINDS OF NATURE OF THE PRODUCT: by the Philippine government by
     Identical Product – These are goods having price ceiling.
    that are homogenous, almost the
    same in features and uses. This type IMPERFECT COMPETION
    of products commands a higher  A type of market structure showing
    degree of competition. some but not all features of a
    competitive market.
     Differentiated Product – These are
    goods that are heterogenous. No 1. Monopolistic Competition – such
    exact product exists on the market. that many producers sell products
    It differs in features and has almost that are differentiated from one
    no close substitute. Producers enjoy another but not perfect substitutes.
    a certain degree of control over the  Example: bath soap, toothpaste,
    price and quantity of products. lotion, and can goods
    2. Oligopoly – Market structure in
    which a few times dominate: or
    there are many buyers for a product
    or service.
     Example: Cable,
    Telecommunication, and
    Transportation services
    3. Monopoly – characterized by a
    single seller of goods with no close
    substitute, selling unique product in
    the market, no competition.
     Example: Meralco, Prime water, and
    Infrastructure corp.
    TYPES OF MARKET:
    • Perfect Competition PROFIT MEASUREMENT:
    • Imperfect Competition • Profit
     Monopolistic Competition  Usually defined as the residual of
     Oligopoly sales revenue minus the explicit cost
     Monopoly of doing business.
     The economist also defines profit as
    the excess of revenues over cost.
    MANAGERIAL ECONOMICS 1st SEMESTER
    |FINALS
    |Ma. Teresa Hidalgo S.Y. 2023-2024

    However, inputs provided by


    owners, including entrepreneurial
    effort and capital, are resources that
    must be compensated.

    WHY DO PROFIT VARY AMONG FIRMS:


    • Disequilibrium Profit Theories
    1. Frictional Proft Theories – it states
    that markets are sometimes in
    disequilibrium because of
    unanticipated changes in demand or
    cost conditions.
    2. Monopoly Profit Theories – some
    firms earn above-normal profits
    because they are sheltered from
    competition by higher barriers to
    entry. Monopoly profits can also
    arise from luck (being at the right
    industry at the right time) or from
    anticompetitive behavior.
    • Compensatory Profit Theories
    1. Innovation Profit Theories –
    describes above-normal profits that
    arise following successful invention
    or modernization.
    2. Compensatory Profit Theories –
    describes above-normal rates of
    return that reward firms for
    extraordinary success in meeting
    customer needs and maintaining
    efficient operations. Compensatory
    profit theory also recognizes
    economic profit as an important
    reward to the entrepreneurial
    function of owners and managers.

    ROLE OF PROFIT IN THE ECONOMY:


    • Above-normal profit serves as a
    valuable signal that firm or industry
    output should be increased.
    • Expansion by established firms or
    entry by new competitors occurs
    quickly during high profit periods.
    • Below-normal profits signal the
    need for contraction and exit.
    Above-normal profits also reward
    innovation and efficiency, just as
    below-normal profits penalize
    stagnation and inefficacy.

    ROLE OF BUSINESS IN SOCIETY


    • Firms exist because they are useful.
    They survive by public consent to
    serve social needs.

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