Economics recognizes two opposite market forms: competition and monopoly. In the first case the firms are very numerous and thus small in comparison to the size of the total market. In consequence they consider market price as being given independently of any action they can take alone with regard to their supply. In the second case one single firm supplies the whole market. Its supply influences market price appreciably, and it is able to increase its profits by limiting supply and establishing a monopoly price.
KeywordsUnit Cost Demand Function Adjustment Process Reaction Function Period Doubling
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