IB Economics: Firms & Market Structures Revision

Firms & Market Structures is a core part of IB Economics. Revise the key concepts and common mistakes below, then lock them in with the free games.

Key concepts

MonopolySingle seller, high barriers to entry

MR < PMarginal revenue under price

Profit maxOutput where MR = MC

Deadweight lossWelfare lost from under-production

Natural monopolyLRAC falls over whole demand

X-inefficiencyCost slack from lack of competition

Price discriminationDifferent prices for same product

First degreeCharge each buyer max WTP

Second degreePrice by quantity (bulk discount)

Third degreePrice by group (student, senior)

Necessary conditionPricing power + no resale + segmentable

WTPWillingness to pay

Kinked demandSweezy 1939 — sticky oligopoly price

Elastic aboveRivals don't match price rise

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