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Profit maximization in different market structures

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I need to analyze how organizations in each market structure maximize profit.

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Solution Summary

This solution analyzes how organizations in perfect competition, oligopoly, monopolistic competition, and monopoly maximize profit.

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The four market structures are perfect competition, monopolistic competition, monopoly, and oligopoly. Firms are motivated to produce at the level where marginal cost is equal to marginal revenue because it is the point of maximum total profit. However, the ability of other firms to freely enter and exit the market can hinder their ability to produce at this level.

In perfect competition, there are many firms selling identical products. Because of this, firms must take whatever price the market offers. Raising their prices will result in zero sales, while lowering prices will cause negative earnings. This is because each company has identical cost curves, and when they ...

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