In perfect competition market a firm will operate at allocative efficiency, where MC =P.
Monopolistic competition – a firm will operate at a profit maximizing output, where MC=MR. Profits are normal with P1. With new players coming the demand will decline and profits decrease – P2 and eventually will come to P=AC – economic profit.
Oligopoly
With collusive oligopoly the chart will look like the one with monopolistic market, where MC=MR (profit maximizing output)
With non-collusive oligopoly – kinked demand curve. With very stabilized priced increase in MC is absorbed by a manufacturer. With P2=AC the manufacturer will operate with economic profit only.
A monopolist will operate at a profit maximizing price and output, where MC=MR.
