ARE100B Miderm 1 Basic Concept Guide
ARE100B Miderm 1 Basic Concept Guide ARE 100B
Popular in Intermediate Microeconomics
Popular in Agricultural & Resource Econ
Miss Elton Cole
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This 1 page Study Guide was uploaded by Jessica Notetaker on Monday October 12, 2015. The Study Guide belongs to ARE 100B at University of California - Davis taught by Marilyn Whitney in Summer 2015. Since its upload, it has received 57 views. For similar materials see Intermediate Microeconomics in Agricultural & Resource Econ at University of California - Davis.
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Date Created: 10/12/15
Sources of Monopoly Power Patent legal document allowing an inventor to produce or sell product for a period of time eg pharmaceutical industry Copyright legal right over a work of art such as books films music etc Legal License most commonly used in quotsinquot industries eg California lottery Economies of Scale more you produce less it costs per unit of production eg natural monopoly Price Discrimination Firstdegree perfect price discrimination 0 each customer is charged by how much he or she is willing to pay aka reservation price even though it is most profitable strategy but it s complicated for 2 reasons 0 Way to find customers reservation prices 0 How to make customers keep quiet about price info Seconddegree price discrimination o Aka volume discounting and block pricing 0 Offer a customer multiple prices based on quantity Thirddegree price discrimination 0 Charge different prices for different types of customers 0 Customers who are pricesensitive sort themselves into a group that looks for coupons and senior student discounts Price Elasticity of Demand If marginal costs are the same for 2 different types of customers you can use this function to make a policy P111EdP211Ed o For example if you want to find percent discount a type of student should get subtract the answer you get P111EdP211Ed from 1 and get the percentage Multiplant Monopolist Let s say a monopolist owns 2 factories and both plants operate Describe the situation with these two cost functions 0 TC1 50 20q1 2q1quot2 o TC2 50 10q2 q2quot2 I The first plant is producing less than the second plant Welfare Effects Distributional effect reduced consumer surplus and increased producer surplus Efficiency Effect deadweight loss of monopoly Perfect Competition PMCi is true for perfect competition in both long run and short run Profit must equal to O in the long run implying that PATC so PMCATC
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