4 22 15 Ch 8 9 10 12 Monopoly marginal revenue curve always below the demand curve cost benefit analysis MC MB MC MR make decision about price and how much to produce always compare marginal cost to marginal benefit On graph to find price you have to do where it meets on the demand curve not the marginal revenue curve find quantity and then draw line to demand curve Consumer Surplus Above market price and below demand curve A 1 2 x B x H Producer surplus above marginal cost curve and below market price trapezoid A 1 2 A B x H Profit Revenue Cost Profit P ATC x Q The price for monopoly is ALWAYS greater than Marginal Cost while in a perfectly competitive market price is equal to MC Monopoly P MC Perfectly Competitive P MC Monopoly s produce less at a higher price than perfectly competitive markets TC FC VC Marginal Revenue additional revenue from producing one more product price taker in a perfectly competitive market you don t make decision on the price only how much to produce at that price Price discrimination Game Theory Game Theory 3 elements players strategies dominate dominated payoffs Payoff Matrix Nash equilibrium both players are stuck in the same cell and there is no incentive to Positive effects demand curve shifts outward Demand curve represents marginal Negative effects supply curve shifts to left supply curve represents marginal cost move from this cell Externalities benefit introduce subsidies surplus introduce taxes deadweight loss Labor Market cost benefit MC MB Wage value of marginal product W VMP VMP P x MP
View Full Document
Unlocking...