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Chapter 10: Monopolies:
Price discrimination: dependent on elasticity of demand Characteristics of a Pure Monopoly (think about economies of scale): Single seller: firm and industry are synonymous No close substitutes: product is unique, consumer who chooses not to buy the monopolized product must do without it Price maker: monopolist controls the total quantity supplied, therefore has considerable control over price. Can change price by reducing quantity, etc Blocked entry: no immediate competitors because of certain barriers that keep competition out (whether they be economic, technological, legal, etc barriers) Nonprice competition Legal barriers to entry: Patents: exclusive right of an inventor to use, or allow use of a specific invention, 20 years global length Licenses: ex FCC only licenses so many radio and television, governments licensing themselves Other barriers: Owner or control of essential resources Economies of scale Pricing Stepping up advertising Monopolist will avoid inelastic area of demand, profit maximization Will produce up to the output at which MR = MC: quantities are prices are determined Price discrimination: Charging each customer in a single market the maximum price they are willing to pay Charging each customer one price for the first set of units purchases and a lower price for subsequent units Charging purchased some customers one price and others another Conditions:
o Monopoly power: must be a monopolist or at least possess some degree of monopoly power (able to control output and price) o Market segregation: must be able to segregate buyers into distinct classes, each of which has a different willingness or ability to buy a product o No resale: buyer cannot resell product or service, ex: prevents low segment from selling to high segment Regulated monopoly: traditionally subject to price regulation, trend now is to deregulate the parts of industries where competition seems possible
Chapter 11:
Monopolistic Competition: Large number of sellers Differentiated products Easy entry/exit from industry Oligopoly: a market dominated by a few large producers of a homogenous or differentiated product Semi closed Each is a price maker: can set price/quantities to optimize profit, but must predict how competitors will react Economies of scales Kinked graph, discontinuity gap Interdependence: competitors benefiting at the expense of competitors Mergers: increase market share of firms, achieve greater economies of scale OPEC Merger International Finance Golden Standard Fixed Rate of Exchange Free movement of gold
Chapter 18: (349-356)
Devaluation/Revaluation:
Floating System:
Chapter 24: (463-476)
12/12/2007 11:59:00 PM
12/12/2007 11:59:00 PM