ajaz_eco_204_2012_2013_chapter_16_Market_Power

Eco 204 s ajaz hussain do not distribute

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Unformatted text preview: when neither cases B or C occur. In this case, the optimal output is found by substituting , in the FOC: ⏟ ⏟ ⏟ This is the “ECO 100” rule for revenue maximization and it happens when the unconstrained solution is between the minimum output and capacity; or when the unconstrained solution is equal to the minimum output and less than capacity; or when the unconstrained solution is greater than the minimum output and equal to capacity (respectively shown in the following three graphs): Unconstrained solution Demand ⏟ Unconstrained solution Demand ⏟ 28 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. Unconstrained solution Demand ⏟ ⏟ Unconstrained solution Demand ⏟ Since case D occurs when neither cases B or C occur, we see that ⏟ which confirms some of the conditions for Case D. In summary: Monopoly Revenue Maximization Problem Case C Case B Case D () When ⏟...
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