Microeconomics

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the industry where positive short term profits are being made, ultimately shifting the supply curve until profits decrease to zero[3]. Monopolies can maintain positive economic profit in the long. Profit is dependent on the level of competition a firm faces, and a monopoly faces zero competition. Monopolies are able to set price above average total cost at a given output when maximizing profit, allowing for super-nominal long run profit[8]. Perfectly competitive markets achieve an efficient allocation of resources as the price of goods produced is equivalent to the marginal cost, and it would not be possible to increase the level of societal satisfaction by producing another unit of goods[1].

Conclusion

In conclusion, the field of microeconomics is an important window into the decision making of individuals, households, and firms. Theoretical market models like perfectly competitive markets give a basis of comparison for real-world markets. Monopolistically competitive, oligopolistic, and monopolist market models all provide useful insight into aspects of real-world markets and their relationship to the consumer, other firms, possible economic profits, and allocation of resources.

References

1. AmosWEB is Economics: Encyclonomic WEB*pedia. (n.d.). Retrieved June 20, 2017, from http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=perfect+competition,+efficiency

2. Anonymous. (2010, August 2). Economic benefits of the patent system. Retrieved June 20, 2017, from http://www.alrc.gov.au/publications/2-patent-system/economic-benefits-patent-system

3. Boundless. (2016). Conditions of Perfect Competition. Boundless. Retrieved from /economics/textbooks/boundless-economics-textbook/competitive-markets-10/perfect-competition-66/conditions-of-perfect-competition-248-12345/

4. Definition of “Perfect Competition.” (n.d.). Retrieved June 20, 2017, from http://economictimes.indiatimes.com/definition/perfect-competition

5. Examples of Oligopoly Markets. (n.d.). Retrieved June 20, 2017, from http://yourbusiness.azcentral.com/examples-oligopoly-markets-6720.html

6. Monopolistic competition. (n.d.). Retrieved June 20, 2017, from http://www.economicsonline.co.uk/Business_economics/Monopolistic_competition.html

7. Monopolistic Market. (n.d.). Retrieved June 20, 2017, from http://www.investopedia.com/terms/m/monopolymarket.asp

8. Monopoly. (n.d.). Retrieved June 20, 2017, from http://www.economicsonline.co.uk/Business_economics/Monopoly.html

9. What is Oligopoly Market? definition, meaning and features - Business Jargons. (n.d.). Retrieved June 20, 2017, from http://businessjargons.com/oligopoly-market.html