Question

Please summarize into short sentences.

1. Marginal revenue and Marginal Cost

2. Four market

3. Production input optimization

4. Prisoners' Dilemma game

5. 1st, 2nd, 3rd Degree price discriminations

Thank you in advance.

Answer 1

1. Marginal revenue

When one additional unit of product is sold, the additional revenue generated from that unit is added to the total revenue, this additional unit is known as marginal revenue.

Symbolically it is represented as, MR = ΔTR÷ ΔQ

Marginal cost

When one more unit of output is produced the cost of the unit adds on to the total cost, this additional cost is known as marginal cost.

Symbolically it is represented as, MC = ΔTC÷ ΔX

2. Four markets

The markets are categorized into 4 categories that are,

• Perfect competition market- large numbers of buyers and sellers are present with Free exit and entry of the firms where the product is homogenous.

• Monopolistic competition- large numbers of buyer and seller are present in this type of market, with product differentiation and free entry and exit of farms in which buyer and sellers have imperfect knowledge.  

• Monopoly market- Only a single firm is present with no close substitute for its product, here the price is determined by the firm hence, there is a price discrimination. In this type of market there is barriers to entry for new firms

• Oligopoly market

Few dominant firms operate the market with mutual interdependence. Here the product may be homogenous or heterogeneous and entry and exit of the firms is restricted.

There are 3 categories of oligopoly markets,

a) Perfect or imperfect oligopoly

b) Non collusive or collusive oligopoly

c) Duopoly