Lec_04_profit_max

Lec_04_profit_max - Office hours for professor and teaching...

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1 Office hours for professor and teaching assistants through Oct 24 Econ 112 M 5-6 Vinayak Alladi Econ 126 Th 3:30-4:30 Roy Allen Seq 207 F 9-10 Soojin Jo Seq 139 Th 10-11 Matthew Louie Econ 112 W 4-5 Ayal Chen-Zion Econ 117 Tu 10-11 Martha Gimbel Econ 307 M 3:15-4:15, Th 2-3* James Hamilton *Hamilton out of town Sep 29, Nov 3, and Nov 17 Chapter 9: Monopoly, Oligopoly, and Monopolistic Competition A. Total revenue and marginal revenue total revenue = total amount received from selling product ( = PQ ) marginal revenue = additional revenue from selling one more unit Whether total revenue increases when you decrease the price depends on elasticity • If 10% price decrease leads to more than 10% gain in Q (elasticity > 1), then total revenue goes up. • If 10% price decrease leads to less than 10% gain in Q (elasticity < 1), then total revenue goes down. Special case: linear demand curve P ± a " bQ a is the intercept " b is the slope Marginal revenue: a " 2 bQ This is equation of a line where a is the intercept " 2 b is the slope

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2 Q P Demand for firm’s product: P = a - bQ Demand curve: slope = -b Intercept = a Marginal revenue curve: slope = -2b Revenue would increase if firm lowered price in blue region. Revenue would decrease if firm lowered price in pink region. Revenue would increase if firm lowered price in blue region. Revenue would decrease if firm lowered price in pink region. Chapter 9: Monopoly, Oligopoly,
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This note was uploaded on 03/02/2012 for the course ECON 2 taught by Professor Kim during the Fall '08 term at UCSD.

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Lec_04_profit_max - Office hours for professor and teaching...

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