ECON-Week-10

ECON-Week-10 - o Monopolists: Price Makers o Perfectly...

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Economics: Week 10 05/11/2007 12:59:00 Suppose we have a perfectly competitive market with SR and LR at Equilibrium. Suppose milk benefits from an advertising campaign (demand side). Everything  else held constant, what will happen to the equilibrium price And Quantity in the Long  Run?
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Because of the increased profit in the market, there will be  ENTRY , increasing  the number of sellers (suppliers).
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In the long run, there is a greater quantity of milk supplied as you can see in the  movement from  A  to  C . Market Structure (monopoly) One Seller o Market Demand = Firm Demand
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Unformatted text preview: o Monopolists: Price Makers o Perfectly competitive: Price Taker • Good has no close substitutes o Demand curve is negatively sloped (steep) and the good is inelastic. o ← • High Barriers to entry o Demand can only sustain 1 producer o Economies of scale means more production lower costs o Control of a scarce input Exclusive contracts Patents/ copyrights ← Firm behavior in the SR ← • where MR = MC is where your economic balance = 0 • Q x ATC = TC • Economic profit in this situation is positive....
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This note was uploaded on 01/16/2012 for the course ECON 2000 taught by Professor Roussell during the Fall '06 term at LSU.

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ECON-Week-10 - o Monopolists: Price Makers o Perfectly...

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