econ101w0716

# econ101w0716 - Introductory Economics Economics 101-300...

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(c) Sherrie A. Kossoudji Introductory Economics Economics 101--300 Lecture # 16 Sherrie A. Kossoudji If you print the preliminary version of these slides before class, please be aware that they are likely to change right up to class time.

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(c) Sherrie A. Kossoudji Please remember that reading these slides does not substitute for attending class. These slides are merely outline guides for what is discussed during the lecture.
(c) Sherrie A. Kossoudji Schedule: Week 11 WEEK 11: WEEK OF MARCH 12 TH Lecture #: 16-17 Discussion #: Anderson: Chapter 13 Subjects/Concepts: Other market structures, monopoly, oligopoly Readings: This week: Next week: KW Chapter 14, KW Chapter 15 KW Chapter 15, KW Chapter 16 Homework: Graded: Ungraded: Chapter 12, problem set II; Chapter 18, problem set II Chapter 14, problem set I; Chapter 15, problem set I Section Quizzes: None Exams: None Other Important Information: None

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(c) Sherrie A. Kossoudji Sherrie’s office hours Sherrie’s office hours are changed—for this week only—to Friday between 1:30 and 3. Anyone who wants to drop the class should stop in for a signature.
(c) Sherrie A. Kossoudji Figuring out cost from cost equations Suppose you are given this total cost equation: TC = 200 + 5Q +2Q 2 What is total cost if Q=10? 200 + 5*10 + 2*100 = \$450 What is total fixed cost if Q =10? \$200 What is average fixed cost if Q = 10? \$20 What is average variable cost if Q = 10? \$25 Etc.

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(c) Sherrie A. Kossoudji Market Structures Competition —as on previous slides Monopoly —just one firm selling a product for which there is no close substitute. Oligopoly —just two or three (or so) firms selling a product for which there is no close substitute. Monopolistic Competition —the products are not homogeneous, but have slightly different characteristics.
Government Regulation – Straight grant of monopoly – Patents – Licensing The firm creates barriers to deter entry Predatory pricing—monopolist sets its price below new entrants’ cost of production to drive out rival and discourage future entry (illegal) – Excess capacity—monopolist builds up production facilities in excess of those currently needed. This signals new firms that it is willing to compete fiercely. – Limit pricing—monopolist lowers the price so that potential entrants think that its marginal cost is lower than it really is. The firm owns a non-reproducible asset Economies of Scale with a natural monopoly (ATC is declining and the minimum efficient scale is larger than the size of the market), it is efficient to have only one firm in the industry. Information

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econ101w0716 - Introductory Economics Economics 101-300...

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