Lecture 09 - ECO100 - Summer 2010 [Compatibility Mode]

Lecture 09 - ECO100 - Summer 2010 [Compatibility Mode] -...

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Unformatted text preview: ECO 100Y ECO 100Y t d t i t t d t i t Introduction to Introduction to conomics conomics Economics Economics Lecture 9: Lecture 9: Monopoly Monopoly Gustavo Indart Slide 1 haracteristics of a Monopoly haracteristics of a Monopoly Characteristics of a Monopoly Characteristics of a Monopoly There is only one supplier of a commodity The commodity has no close substitutes There is a barrier to the entry of new firms Gustavo Indart Slide 2 arriers to Entry arriers to Entry Barriers to Entry Barriers to Entry Barriers to entry are legal or natural impediments rotecting a firm from competition from potential new protecting a firm from competition from potential new entrants egal barrier to entry Legal barrier to entry Public franchise Government licence Patent atural barriers to entry Natural barriers to entry Unique source of supply of a raw material conomies of scale Gustavo Indart Slide 3 Economies of scale Single Single-Price Unregulated Price Unregulated onopoly onopoly Most monopolies are regulated by government We will examine the case of an unregulated monopoly This will show why governments regulate onopolies monopolies We will focus on the analysis of a single-price monopoly That is, a monopoly that charges the same price for ch and every unit of its output Gustavo Indart Slide 4 each and every unit of its output Short Short-Run Cost Schedule Run Cost Schedule $ MC C AC AVC Q We will assume that the cost schedule of a monopolist is similar to that of a mpetitive firm that is mainly that the Gustavo Indart Slide 5 competitive firm, that is, mainly that the average total cost curve is U-shaped . Demand Curve Facing a Demand Curve Facing a onopolist onopolist P What distinguishes a monopoly firm m firm th t p r t nd r p rf t...
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Lecture 09 - ECO100 - Summer 2010 [Compatibility Mode] -...

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