Section 6 - EEP 101/Econ 125 Section 6 Diana Lee Spring...

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EEP 101/Econ 125 Section 6 Diana Lee Spring 2010 1 Corrections Monopolist: MR in the setting of club goods is the same as the MB curve. This is because the monopolist captures the entire consumer willingness to pay, so for an additional unit, the additional revenue is given by the MB of the last unit. Club goods: As pointed out by the afternoon section, whenever we are calculating the optimal entry fee, the goods we are dealing with must be club goods, since people must pay to use them. That said, the difference between club goods and private goods are not very substantial, since any public good can be turned into a club good by restricting entry and charging an entry fee. 2 Homogeneous Preferences and Different Providers Monopolist Benevolent government 1
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2.1 Concessionaire 2.2 Examples Suppose an individual’s demand for Yosemite park is given by Di(Q) = 20-2Q. The cost of maintaining Q units of land is given by MC = 4Q. Suppose there are only two individuals in the economy and they are identical.
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Section 6 - EEP 101/Econ 125 Section 6 Diana Lee Spring...

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