UA EC 110 - Comparison of previous markets/Oligopolies (3 pages)

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Comparison of previous markets/Oligopolies



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Comparison of previous markets/Oligopolies

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Lecture number:
24
Pages:
3
Type:
Lecture Note
School:
University of Alabama
Course:
Ec 110 - Prin of Microeconomics
Edition:
1

Unformatted text preview:

ECON 110 1st Edition Lecture 24 Outline of Last Lecture I Price Discrimination a True monopolies b Common Areas c Arbitrage II Effects of Price Discrimination III Monopolies and Public Policies Outline of Current Lecture I Comparison of Monopolies Monopolistically Competitive Markets and Perfectly Competitive Markets II Oligopolies a In Essence b Cartels i Definition ii Problems that arise Current Lecture To finish out Monopolistically Competitive markets let s compare them with the other kinds of markets that we ve studied Element Monopolies Monopolistically Competitive Perfectly Competitive Demand Curve Downward sloping Downward sloping Downward sloping Price Price MR Price MR Price MR Amount of Firms One A few Many These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Product One Differentiated Identical Profit in the Long Run Earns profit in the LR Earns 0 profit in LR Earns 0 Profit in LR Relationship between MR MC MR and MC maximum profit MR MC MR MC Efficient Production Doesn t produce at socially efficient output Usually socially efficient Doesn t produce at socially efficient output Hopefully that clarifies some differences for you The next market comes from Chapter 17 Oligopolies In essence They have few sellers and many buyers o The actions of one seller strongly affect all the other firms o They are in a way interdependent on each other There is tension between cooperation and self interest o All the firms are best off as a coalition acting as a monopoly o How ever self interest becomes a hindrance to alliances When they cooperate Oligopolies form Cartels A Cartel is a group of firms acting as a monopoly They together set price and quantity They share profits o Split evenly o Split by marketing areas Problems they face o Internal cheating Sometimes a firm may decide to produce above the agreed upon quantity in order to increase profit This would decrease



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