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This lecture covered monopolies and economic efficiency, characteristics of private goods and public goods. Also, private externalities and negative externalities
- Lecture number:
- Lecture Note
- University of Oklahoma
- Econ 1123 - Princ. of Econ-Micro
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ECON 1123 1st Edition Lecture 16 Outline From Previous Lecture (Lecture 15) I. The theory of pure monopoly A. Characteristics of Pure Monopoly B. Monopoly Profits Outline Lecture 16 I. Monopoly and Economic Efficiency II. An extension of the competitive model: Externalities A. Characteristics of Private goods and public goods B. Positive externalities: External Benefits C. Negative Externalities: External Costs Lecture 16 Notes I. Monopoly and Economic Efficiency Pure competition is efficient, monopoly is not. In monopoly, Price>MC… This is a gap that implies inefficiency II. An extension of the competitive model: Externalities A. Characteristics of Private goods and public goods Private good characteristics: (hamburgers, cars) 1)Rival in Consumption: (consumption by one person reduces consumption by others, he gets the product you don’t… because there is only one of it and if he got it then it is not available to you.) 2)Exclusion of non-payers is relatively easy by charging market price Public good characteristics: (National Defense, Flood Control Project) 1)Nonrival consumption: Consumption by one person does not necessarily reduce consumption by others 2)Exclusion of non-payers (free-riders) from consumption of a public good is difficult or costly ***Externalities- Effects of economic activities that are not taken into account by voluntary market-exchanges, rather these effects are external to the market mechanism 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.
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