The Concept of

Profit
Maximization
 ECONOMIC PROFIT
PROFIT
PROFIT MAXIMIZATION
- is simply
-is the return -in economics,
defined as the
accruing to is the process
difference that
enterprise by which a firm
arises when a
owners determines the
firm’s total (entrepreneurs) price and
revenue is after the payment output level that
greater than of of all explicit costs
returns the
its total cost. and all implicit
costs.
greatest profit.
FORMULA:
FORMULA:
Profit
Profit == Total
Total Revenue
Revenue –– Total
Total Cost
Cost
Market Structure
- it is a classification system for the key traits of a market, including the number of firms,
the similarity of the products they sell, and the ease of entry into and exit from the market
structure.

Perfect
competition Monopoly
Types of
Market
Oligopoly Structure
Monopolistic
competition
Special Types of Market
Structure
a. Perfect competition - This is a market structure characterized by:

Large number Homogeneous Very easy

i of small firms
iiii product
iiiii
entry and exit

- market is composed of many - the products offered by the - there are no barriers to entry
firms and buyers. competing firms are identical or impediments to the exit of
not only in physical attributes existing sellers.
but are also regarded as
identical by buyers who have no
preference between the
products of various producers
b. Monopoly -
This is the opposite
extreme of perfect
competition. Under
i A single seller or producer.

monopoly,
ii A unique produce – no close
substitutes for the monopolist’s
product.

Impossible entry – barriers to entry are

so severe in a monopoly so that it is

iii impossible for new firms to enter the

market. Barriers to entry include
(a) sole ownership of vital resource,
(b) legal barriers like government
franchises and licenses, and
(c) economies of scale.
c. Monopolistic competition- Type of market structure characterized by:

i ii iii
Many small Differentiate Easy entry and
sellers d products exit

– monopolistically - product differentiation - there are no barriers to

competitive market is is the process of entry preventing new
comprised of a large creating real or firms entering the
number of apparent differences market or obstacles in
independently-acting between goods and the way of existing firms
firms and buyers. services sold in the leaving the market.
market.
 d. Oligopoly- Type of market structure characterized by:

Difficult entry
there are formidable barriers of
iii entry which make it difficult for
new firms to enter the market.
Homogenous or differentiated products
- the products offered by

ii
suppliers may be identical or,
more commonly, differentiated
from each other in one or more
Few sellers
- the bulk of market supply is in
aspects.
i the hands of a relatively few
large firms who sell to many
small buyers.
e. Special Types of Market Structure

i ii iii iv v

Bilateral Bilateral Duopsony Duopoly Monopsony

– market situation a subset of –a form of buyer
Monopoly Oligopoly – –
– market situation market condition with in which there are oligopoly concentration,
comprising one a significant degree of only two buyers describing a where in the
seller and only one seller concentration but many sellers. market situation market situation
buyer (like and a significant in which there in which a single
monopsony). degree of buyer are only two buyer confronts
concentration. many suppliers.
suppliers.
MEMBERS:
MEMBERS:
Dapitan,
Dapitan, Jerwin
Jerwin
Diwa,
Diwa, Roselle
Roselle
Esguerra,
Esguerra, Christian
Christian
Lacostales,
Lacostales, Maria
Maria Jaila
Jaila
Macapagal,
Macapagal, Marriane
Marriane
Manabat,
Manabat, Julius
Julius Caesar
Caesar
Manalo,
Manalo, Julius
Julius
Maramo,
Maramo, Emalyn
Emalyn
Thank You!