OU ECON 1123 - Final Exam Study Guide (11 pages)

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Final Exam Study Guide



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Final Exam Study Guide

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This is the final study guide


Pages:
11
Type:
Study Guide
School:
The University of Oklahoma
Course:
Econ 1123 - Princ. of Econ-Micro
Edition:
1

Unformatted text preview:

Econ 1123 1st Edition Final Exam Study Guide Lectures 18 24 NOTE This final is cumulative so this study guide is to be used with study guides 1 and 2 for the full study guide Tip The book is a really good place to find the definitions for the define and explain portions Lecture 18 March 6 Concepts covered I Monopoly Inefficiency When a monopoly is inefficient the demand schedule and marginal revenue schedule will not meet at the same place on the upward sloping marginal cost graph Sometimes this causes deadweight loss The loss of consumer and producer surplus because some transactions are not undertaken Note monopolies are more inefficient because they are protected from competition so they have weaker incentives to minimize costs Monopolists could devote all economic profits to rent seeking and still earn normal accounting profits Price Discrimination Pre supposes some degree of market power or monopoly power i e some control over the price charged unlike pure competition who are price takers Generally charging different consumer groups different prices for the same product or service Requirements for price discrimination Sellers must have some market or monopoly power Sellers must be able to separate consumers based on their elasticities of demand Sellers with market power must be able to prevent arbitrage prevent low price buyers from reselling to high price buyers II Monopoly Characteristics Revisited Sources of monopoly power Monopoly Inefficiency Rent seeking x inefficiency Price D Regulating a Natural Monopoly Anti Trust Policy In monopoly there is one seller with no close substitutes and significant barriers to entry Source of monopoly power economies of scale decreasing average costs over a large range out output Examples of Natural Monopolies intel local newspapers electrical utilities Definitions Rent Seeking behavior directed toward avoiding competition resources expended to protect a monopoly position lobbying licensing requirements Lecture 19 March 8



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