Micro Unit 4:

Unit 4 Organizing Principles

You will learn a bunch of graphs in this unit. Make sure you feel very comfortable with the concepts and graphs of perfect competition before you move on to imperfect competition.

This unit starts with the characteristics of monopolies. You need to be able to draw and analyze a monopoly making a profit and a loss. There is only one graph because the market is the firm. Make sure that you can identify consumer surplus, dead-weight loss, and the elastic and inelastic range of the demand curve. Monopolies charge a higher price and produce less output than perfectly competitive markets and are sometimes regulated by the government. Also be familiar with the concept of price discrimination.

Next you will learn about monopolitistic competition and the fact that these firms make no economic profit in the long run. You need to be able to draw the graph and show it changes from the short run to the long run.

Lastly, you will learn about oligopolies and game theory. Make sure you can read a game theory matrix and determine each firms dominant strategy.

There is A LOT to this unit, and the saying "Luck is a dividend of sweat. The more you sweat, the luckier you get" will adequately capture this unit. Stick with it!