Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.
Understanding
- I can list the features of monopolistic competition and tell it apart from perfect competition, oligopoly and monopoly. (Guide: “A market between two extremes”; Practice Q1)
- I can explain why each firm’s demand curve slopes down but is fairly elastic. (Guide: “A market between two extremes”)
- I can explain what advertising is meant to do to demand, and how it affects ATC and MC. (Guide: “Differentiation and advertising”; Practice Q6)
- I can explain why zero economic profit still means a normal return for the owners. (Guide: FAQ; “The short run”)
Calculation and graphing
- I can find the profit-maximising output and price from a table or graph, and calculate profit or loss. (Guide: Worked examples 1 and 2; Practice Q4, Q6)
- I can decide whether a loss-making firm should stay open in the short run by comparing price with AVC. (Guide: Worked example 2(b); Practice Q6)
- I can draw a labelled short-run graph showing an economic profit or loss. (Guide: Figure 1)
- I can draw the long-run equilibrium graph with demand tangent to ATC to the left of minimum ATC. (Guide: Figure 2; Practice Q5)
- I can calculate excess capacity, consumer surplus and the deadweight loss in long-run equilibrium. (Guide: “Why the long run is inefficient”; Practice Q5)
Reasoning
- I can explain how entry (after profits) or exit (after losses) shifts each firm’s demand until P = ATC. (Guide: “The long run”; Practice Q3, Q4)
- I can explain why long-run equilibrium is neither allocatively nor productively efficient. (Guide: “Why the long run is inefficient”; Practice Q2, Q7)
- I can compare long-run outcomes with perfect competition and monopoly, and weigh excess capacity against product variety. (Guide: comparison table; Practice Q7)
All ticked? Move on to Topic 4.5: Oligopoly and Game Theory, or return to the course roadmap.