Chapter 24. The coincidence of the inverse demand curve D and the average revenue curve AR.

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Presentation transcript:

Chapter 24

The coincidence of the inverse demand curve D and the average revenue curve AR.

With MR = d R / d y = p (y ) [ /ε(y) ], p ( y ) = MC ( y ) / [1 – 1 / |ε( y ) | ].

Two equivalent ways to determine the equilibrium: MC = MR, or AR = MC / ( 1 – |ε| ). Figs. FOC: MC = MR. SOC: MC ’ ≥ MR ’.

The impact of taxes on a monopoly. p425 Inefficiency of monopoly. Fig. p426 Deadweight loss of monopoly. Fig,

Inefficiency of monopoly Mc MR Demand, AR Price pmpm pcpc ymym ycyc output Deadweight lost

Deadweight loss of monopoly A B C PRICE Monopoly Price P* Competitive price MC Demand, AR MR Y* output 垄断收益

Natural monopoly. Figs. p417 What causes monopolies: by nature or by permission. The minimum efficient scale factor. Regulation of monopoly: AC = AR.

Chapter 25

Price discriminations of first-degree (perfect), of second-degree (bulk discounts), and Price discrimination of third-degree (market segmentation): Figs.

MC(y 1 +y 2 ) = MR 1 (y 1 ) = MR 2 (y 2 ) gives p 1 [ 1 – 1 / |ε 1 ( y 1 )| ] = p 2 [ 1 – 1 / |ε 2 ( y 2 )| ].