Perfect Competition

In perfect competition, the demand is constant because producers are price takers, rather than price setters.  Firms can only receive normal profits out of their transaction and there is the products from all firms are indifferent (ex: wheat).  The market is made out of large amount of firms, and a firm entering or exiting the market will not affect the price or demands.  There are minimal to no movements in short run.

Monopolistic Competition

The graph illustrated above represents a long run monopolistic competition market.  In a short run, it is possible for firms to earn economic profits.  For example, the lone gas station in the middle of nowhere will earn economic profit, but in a long run monopolistic competition market, only normal profits can be made.  The demand slope is always in a downward sloping, and where the average cost and average revenue meets is the break even points.  Entry into the monopolistic competition market is easy and almost unrestricted.  Examples are restaurants and retail stores.

Oligopoly

Oligopoly is dominated by a few large firms.  It is extremely difficult to enter into the market and the firms have significant control over its price, hence there are chances for price war and price competition.  The kinked demand curve shows how the demand can change from elastic and inelastic as a direct effect of the marginal revenue.  As illustrated in the game theory, nonprice competition and price agreements are often found in this type of market, even though it is a practices deemed as illegal in many countries.

Monopoly

The last graph is a monopoly.  There are no competition, and near impossible for new firms to enter into the market, therefore, monopoly is always making economic profits.  As illustrated in the text book, increasing the supply will not affect the demand, but it will only cause monopoly firms to lower their price to avoid a surplus.  The maximum profit is where the marginal revenue meets the marginal cost.  As listed in the table above, Government are not on side with the monopoly market, and tries to control using the price setting method, taxing, and nationalization.