Section 1_ 9-6-2018.pdf

# P d example market demand is q 100 2p find egp qp tpd

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p d Example Market demand is Q 100 2p Find Egp

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QP Tpd 24ps Egp 24D.pl 00 2 P2 242100 zp2 Regression Recall dIn X f DX ddYn d Using data we typically take logs of prices and quantities and estimate regression models In G a t 13 In Pt E 13 a dhd provided InP is exogenous d lnp Monopoly A seller without close substitutesKompetitors price setter not a price taker Keytradeoft Since a monopolist is setting prices they lace a key tradeoff increase price and gain more for every unit BUT lose the marginal buyer Gained revenue for each unit whose valuation greater than WM pts ftp iom zf EIEfr mmasose Q D Q
Q D Q This tradeoff guides much of the introductory monopolist theory MarginalRevenuesince a monopolist is a price setter the market prices are no longer an exogenously given p Instead they now depend on the quantity the monopolist produces PCQ Revenue is therefore RCQ7 PCQ Q Differentiating we have marginal revenue MRCGt ddRQCQI pco.lt ddPC Q Since d Q7 do we have MR G P Q t dff.IQ c Pfa MR at Q will always be less than the competitive m am pal selling on extra unit introduces extra revenue
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