Theory of the Firm

General

Profit-maximising output occurs where…………………………………………

Productive efficiency occurs where……………………………………………..

Allocative efficiency occurs where………………………………………………..

Normal profits are defined as………………………………………………………

Perfect competition

 

Assumptions

 

 

Diagram:

The Industry                                                                         The firm

 

 

Difference between the long run and short run equilibrium

 

Efficiency	Yes/no	Why?
Productive efficiency
Allocative efficiency

 

 

 

Monopoly

 

Assumptions

 

Diagram: (short run and long run equilibrium)

 

 

 

Difference between the long run and short run equilibrium

 

Efficiency	Yes/no	Why?
Productive efficiency
Allocative efficiency

 

Monopolistic competition

 

Assumptions

 

Diagram: (Short run and long run equilibrium)

 

 

 

 

 

 

Difference between the long run and short run equilibrium

 

Efficiency	Yes/no	Why?
Productive efficiency
Allocative efficiency

 

Oligopoly

 

Assumptions

 

Diagram:

 

 

 

 

Difference between the long run and short run equilibrium

 

Efficiency	Yes/no	Why?
Productive efficiency
Allocative efficiency