Lec_06_price_discrimination

Lec_06_price_discrimination - Chapter 9: Monopoly,...

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1 • First in-class exam on Monday, Oct 17 • Exam covers Chapters 7 and 9 • Answers to practice exam will be reviewed in discussion sections between Monday Oct 10 - Friday Oct 14 • A second practice exam can be downloaded from course web page and reviewed on your own Chapter 9: Monopoly, Oligopoly, and Monopolistic Competition A. Total revenue and marginal revenue B. Total cost, marginal cost and fixed cost C. Profit maximization D. Monopoly E. Perfect competition F. Comparison between perfect competition and monopoly Under monopoly, price (marginal benefit to consumer of getting more goods) is greater than marginal cost to society of producing one more unit. Deadweight loss results when these desired goods don’t get produced. Deadweight loss represents goods that should be produced but aren’t demand demand supply Marginal cost MR P1 Q1 Deadweight loss under monopoly Q2 P2 Total surplus under perfect comp Chapter 9: Monopoly, Oligopoly, and Monopolistic Competition A. Total revenue and marginal revenue B. Total cost, marginal cost and fixed cost C. Profit maximization D. Monopoly E. Perfect competition F. Comparison between perfect competition and monopoly G. Price discrimination Our standard model of monopoly assumed that monopolist had to charge all customers the same price Price discrimination: monopolist has the power to charge different people different prices for the same product
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2 “Perfect price discrimination”: monopolist can charge each customer the maximal amount that customer is willing to pay Under perfect price discrimination, marginal revenue would be the price Monopolist that can discriminate perfectly Q P demand MC = marginal revenue Q1 Monopolist chooses to produce Q1
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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_06_price_discrimination - Chapter 9: Monopoly,...

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