Econ 201 1st Edition Lecture 17 Tuesday 3 10 I How to Study for this Final Zero in on the context How much or how big Not talking about supply or demand curves How much has to do with elasticity Economic problem how to allocate resources When talking about competitive market analysis supply and demand shift Sections on the final Perfect competition firms with perfect competition monopoly and externalities II Overview A Perfect Competition Price takers Every unit that they sell the price that they are going to receive is the market price Will always produce where MR MC B Monopolies 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 Downward sloping demand curve in a firm monopoly C Externality Perfect and social marginal benefits Consumption externality and production externality Consumption externality Demand shift moves Positive because demand shifts up Difference between the benefits that improve society and the benefits that improve the individual How much would society like to buy or allocate in this market How would the private market work if it just acted on its own Ex Roommates putting in communal funds for internet access Ask about relative amount of output If the price were to go up and we want to know how much demand will go down elasticity D Price Floor in Perfectly Competitive Markets If a binging price floor is imposed what is the amount of transactions that would actually take place in the market place Qd Can t force another party to engage in a transaction Sellers would like to sell Qs but they can only sell at Qd E Monopoly Left alone how much will this monopoly charge Comparing consumer surplus Do analysis of the monopoly market Compare the monopoly output to the socially optimal level of output F Difference Between Demand and Quantity Demanded Demand at any give price what would consumers be willing and able to buy Quantity Demanded at a specific price consumers are willing and able to buy a specific amount G Buyers Burden and Sellers Burden Tax shifts supply curve back Buyers price went up How much is the tax Vertical distance between the supply and demand curve BB Es Es Ed SB Ed Es Ed
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