MonopolyMonopsony-2

MonopolyMonopsony-2 - refers to a market with only one...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Monopoly The Costs and Benefits of Monopoly Deadweight loss : If consumers must pay monopoly price they lose consumer surplus equal to the sum of the monopoly profits and deadweight loss of the economy. Rent-Seeking: the expenditure of resources to attain government created monopoly profits. Part of the monopoly profit is used for rent seeking. Benefits of Monopoly Incentive for R&D.
Background image of page 1

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

View Full DocumentRight Arrow Icon
Monopsony Monopsony
Background image of page 2
Background image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: refers to a market with only one buyer. In this market, the buyer will maximize its profits, which is the difference of value and expenditure. max When profit is maximized (V(Q) - E(Q)) = 0 Thus, MV = ME, that is, the marginal value (additional benefit from buying one more unit of goods) is equal to the marginal expenditure (additional cost of buying one more unit of goods)....
View Full Document

This note was uploaded on 10/24/2011 for the course ECON 460 taught by Professor Staff during the Spring '08 term at Maryland.

Page1 / 3

MonopolyMonopsony-2 - refers to a market with only one...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online