Class03_24

Class03_24 - 24/03/2008 Class Notes (cover part of Chapter...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
24/03/2008 Class Notes (cover part of Chapter 11 in the textbook) Class Outline Market Power and Monopoly Monopoly vs. Perfect Competition Market Power and Monopoly Def. Market Power Market Power is the ability to influence the market, and in particular the market price, by influencing the total quantity offered for sale. Extreme : Monopoly Def. Monopoly Monopoly is a firm that produces a good for which there are no close substitutes and that is protected by a barrier that prevents other firms from selling that good or service. Single-Price Monopoly Def. Single-Price Monopoly A Single-Price Monopoly is a firm that must sell each unit of its output for the same price to all customers. Because there is only one firm the demand curve the firm faces is the market demand curve. If the firm cuts the price it sells more. Example : Market for Haircuts Suppose the demand for haircuts is given by: ( 29 1 10 2 2 20 d d Q p p Q = - + = - + 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Q d p TR MR 0 20 0 1 18 18 18 2 16 32 14 3 14 42
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/29/2008 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue.

Page1 / 5

Class03_24 - 24/03/2008 Class Notes (cover part of Chapter...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online