Comparing Market Structures

Below is a brief outline of the four market structures; perfect competition, monopolistic competition, oligopoly and monopoly.

Below are graphs and explanations of each market structure:

Perfect Competition:
In perfect competition, producers can decide how much or how little of a product to make.  The area between the break-even points and between the Total Cost (TC) and Total profit (T) is where the maximum profit lies.

Monopolistically competitive:
Economic profits are greatest when you subtract the costs from the revenue which is highlighted above in the blue box.

Oligopoly:

 Prices at the top part of the kink are prices not matched by competitors.  The prices at the bottom part of the kink are the prices matched by rival firms.  Prices in an oligopoly are very stable prices in spite of changes in the demand and costs as demonstrated in the graph above.

Monopoly:

In a monopoly, the price is not set by the intersection of marginal costs and demand.  Instead, it is set by intersection of marginal revenue and marginal costs.  The break even points are located at the where Total Revenue equals Total Costs.  The greatest profit occurs where the Marginal Costs and Marginal Returns intersect.