Final_Review

Final_Review - Review Chapter 9 Differences between the...

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Review
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Chapter 9 Differences between the four types of markets Market power Sources of market power In particular, economies of scale: as Q increases, ATC decreases. The higher fixed cost is relative to marginal cost, the more important economies of scale will be. Profit maximization for monopolist: choose both P and Q. Price discrimination Perfect discrimination Perfect hurdle Policies to address inefficiencies in monopoly.
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C u s t o m e r R e s e r v a t i o n P r i c e ( $ / b o o k ) Q 6 0 R 5 4 S 4 8 T 4 2 U 3 6 V 3 0 W 2 4 X 1 8 Campus Bookstore is the only textbook supplier in the town, a profit-maximizing business. The following table gives the reservation price of 8 customers. Assume that the marginal and average total cost for each book is $12. How much should the bookstore charge for this book if it must charge a single price to all customers? At the profit maximizing price how many books will they sell each day? What will be the economic profit for the bookstore when selling its profit-maximizing quantity? If the bookstore is selling the socially efficient number of books how many will it sell? If the bookstore uses a perfect hurdle such that people with reservation price higher than $36 will jump the hurdle and people with reservation price below $36 will not, what will be the list price for the book and the discounted price for the book? How many books can the bookstore sell in this case? What is the economic profit? What is consumer surplus when the bookstore does not price discriminate and when the bookstore can charge two different prices for this book?
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Chapter 6 Perfectly competitive market Profit maximization for a perfectly competitive
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This note was uploaded on 04/28/2011 for the course ECON 1 taught by Professor Tang during the Spring '08 term at UCSD.

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Final_Review - Review Chapter 9 Differences between the...

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