Microeconomics:
Describe the diff. market forms ( I've done that)
Under which equlibria and under which circumstances is sustainable profir possible? ( I am lost)
To understand under which equilibria and circumstances sustainable profit is possible, we need to consider the different market forms and their characteristics. There are four main types of market forms in microeconomics: perfect competition, monopolistic competition, oligopoly, and monopoly.
1. Perfect Competition: In a perfectly competitive market, there are numerous firms selling identical products, and there is free entry and exit for firms. Here, sustainable profit in the long run is generally not possible due to intense competition. In the long run, firms tend to earn only normal profit, which is the minimum amount needed to keep the firm in business.
2. Monopolistic Competition: In a monopolistic competitive market, there are many firms selling similar but differentiated products. Entry and exit are relatively easy. Here, firms can make short-term profits due to product differentiation and brand loyalty. However, in the long run, other firms may enter the market, leading to increased competition, thereby eroding profits.
3. Oligopoly: In an oligopoly market, there are a few large firms that dominate the market. Entry barriers can be high. Sustainable profit is possible in this market form due to the limited number of competitors. Oligopolistic firms can engage in strategic behavior such as price fixing, product differentiation, or collusion to maintain their market power and profitability.
4. Monopoly: In a monopoly market, there is a single firm that controls the entire market without any competition. This type of market allows for the highest potential for sustainable profit. Monopolies have significant market power, allowing them to set prices higher than their production costs. However, monopolies are often subject to government regulation to prevent abuse of market power.
It's important to note that the existence of sustainable profit is dependent on various factors such as market conditions, barriers to entry, product differentiation, economies of scale, and government regulations. Each market form has its own unique characteristics and conditions that determine the potential for sustainable profit.