AP Microeconomics / Unit 4: Imperfect Competition
4.1 Introduction to Imperfectly Competitive Markets
Notes
Imperfect competition (monopoly, oligopoly, monopolistic competition): firms face downward-sloping demand, so MR < P.
- They are price makers, not price takers.
Practice
For a firm with downward-sloping demand, MR is:
Lowering price on all units.
Imperfectly competitive firms are:
Some market power.
Which market structure has a horizontal demand curve for each firm?
Only perfect competition.
Ready for more? Take the Unit 4 test.