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Unformatted text preview: nd D notice that
for all units produced (except for the ultimate
the monopolist has positive total producer’s surplus
In the graphs above the
rectangle: ∫( ) ( unit where
) so that
is the area of the green ) Note that producer’s surplus is generally not the same thing as profits which is: ∫( ) Let’s model all consumers in the market as a single “representative” consumer. Notice that in both cases where the
monopolist produces positive output, this “representative” consumer has positive consumer surplus measured as:
ECO 204 Chapter 16: Analysis of Firms with Market Power (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. ∫( ) ∫( ) The price that the representative consumer is willing to pay for a particular unit is read off the demand curve – in the
is the area of the yellow triangle: ∫( ) ( ) Since
for all units purchased (except for the ultimate
) the representative consumer has
positive consumer’s surplus
Recall from consumer theory that if the representative consumer has a quasi-linear
utility function of th...
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This document was uploaded on 01/19/2014.
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