E251x.F11.W11.MonopolyPricing.Ch11

E251x.F11.W11.MonopolyPricing.Ch11 - Monopoly Pricing Week...

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Monopoly Pricing Week 11 Chapter 11
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Pricing with Market Power: Ch 11 11.1 Capturing Consumer Surplus 11.2 Price Discrimination 11.3 Intertemporal Price Discrimination and Peak-Load Pricing 11.4 The Two-Part Tariff 11.5 Bundling 11.6 Advertising
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$Price Qty/T Demand MR Ed > 1 Ed < 1 Ed = 1
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Monopoly Output $Price Qty/T Demand MR MC D Qm Pm Mc
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Monopoly Profit? Monopoly Profit? Qty/T Demand MR MC D Qm Pm AC Profit
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Monopoly Pricing: Single Price Monopoly Pricing: Single Price $ Price Qty/T Demand Marginal Cost MR Pm Qm Potential Efficiency loss
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Capturing Consumer Surplus $Price Qty/T Demand MR A B Pm Qm MC
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Price Discrimination Price Discrimination Charging different prices for different units sold. Allows firms to increase sales and capture more of consumer surplus.
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First Degree First Degree : Charging different customers : Charging different customers different prices equal to Different Marginal different prices equal to Different Marginal Values (Reservation Price) Values (Reservation Price) Auction College scholarships
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Monopoly Pricing: First Degree $ Price Qty/T Demand Marginal Cost P1 Q1 P2 P3 P4 P5 P6 Q2 Q4 Q3 Q6 Q5
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First Degree First Degree: Different Prices for different buyers $ Price Qty/T Demand Marginal Cost MR Tuition Qm Scholarship Amount
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First Degree : Charging different customers different prices based on different marginal values. (i.e. moving down the demand curve) Auction College scholarships IBM Punch Cards Glade Plugins & refills
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Second Degree PRICE DISCRIMINATION 11.2 second-degree price discrimination Practice of charging different prices per unit for different quantities of the same good or service. block pricing Practice of charging different prices for different quantities or “blocks” of a good. Second-Degree Price Discrimination Figure 11.4 Different prices are charged for different quantities, or “blocks,” of the same good. Here, there are three blocks, with corresponding prices P 1 , P 2 , and P 3 . There are also economies of
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E251x.F11.W11.MonopolyPricing.Ch11 - Monopoly Pricing Week...

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