{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

monopoly

# monopoly - Monopoly 146 Monopoly A Profit maximization 1...

This preview shows pages 1–6. Sign up to view the full content.

Monopoly 146 Monopoly A. Profit maximization 1. implies 2. implies 3. can also write this as 4. or 5. linear case a) in case of linear demand, , marginal revenue is given by b) see Figure 23.1. 6. constant elasticity, a) in this case, b) so, optimal condition is c) markup on marginal cost d) see Figure 23.2. B. Taxes 1. linear case --- price goes up by half of tax. Figure 23.3. 2. log case --- price goes up by more than tax, since price is a markup on

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

View Full Document
Monopoly 147 PRICE Profits = π Demand (slope = – b ) MR (slope = –2 b ) y * OUTPUT MC AC a p * Figure 23.1 C. Inefficiency of monopoly 1. Pareto efficient means no way to make some group better off without hurting some other group 2. Pareto in efficient means that there is some way to make some group better off without hurting some other group 3. monopoly is Pareto inefficient since
Monopoly 148 PRICE MC 1 – 1/| ε | MC Demand p * y * OUTPUT Figure 23.2 4. measure of the deadweight loss --- value of lost output 5. see Figure 23.5. D. Patents 1. sometimes we want to pay this cost of inefficiency

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

View Full Document

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern