Recommended
More Related Content
Similar to Micro 17.pdf
Similar to Micro 17.pdf (20)
More from Gale Pooley
More from Gale Pooley (20)
Recently uploaded
Recently uploaded (20)
Micro 17.pdf
- 4. Quizmaster
- 5. Four Market Types Perfect Competition Monopoly Monopolistic Competition Oligopoly
- 6. Perfect Competition Price does not change Marginal Revenue = Price
- 7. Perfect Competition $ Q Total Market $5 D S 0 100 200 300 400 500 $ Q Individual Firm 0 1 2 3 4 5 $5 No matter how much I sell the price stays the same
- 8. Perfect Competition As long as you can sell the next unit for more than it costs to make it, keep making units.
- 9. Perfect Competition Maximize Profit MR = MC ATC will shift up and down due to Fixed Costs
- 10. Marginal Qt y Costs 0 1 $20 2 $15 3 $10 4 $8 5 $5 6 $5 7 $6 8 $7 9 $10 10 $12 11 $15 12 $20 13 $26 14 $52 15 $68 16 $80 Fixed Costs $100 Price $25 How many should you make? What will be your profit?
- 11. MR = MC
- 12. Marginal Qt y Costs 0 1 $20 2 $15 3 $10 4 $8 5 $5 6 $5 7 $6 8 $7 9 $10 10 $12 11 $15 12 $20 13 $26 14 $52 15 $68 16 $80 Free Rent Fixed Costs $0 Price $25 How many should you make? What will be your profit?
- 13. MR = MC
- 14. Q P Perfect Competition Marginal Cost MC Average Cost ATC Total Cost $ Quantity Pro fi t Demand=MR 1. MR=MC? 2.TR= P x Q 3.TC=ATC x Q Total Revenue 4. Pro fi t =TR-TC or (P-ATC) x Q
- 15. Q P Perfect Competition Marginal Cost MC Average Cost ATC Total Cost $ Quantity Pro fi t Demand=MR 1. MR=MC? 2.TR= P x Q 3.TC=ATC x Q Total Revenue 4. Pro fi t =TR-TC or (P-ATC) x Q
- 16. Q P Perfect Competition Marginal Cost MC Average Cost ATC Total Cost $ Quantity Loss Demand=MR 1. MR=MC? 2.TR= P x Q 3.TC=ATC x Q Total Revenue 4. Pro fi t =TR-TC or (P-ATC) x Q
- 17. Monopoly One Seller Unique Product Market Blocked
- 18. Monopoly One Seller Unique Product Barriers to Entry
- 19. Barriers to Entry Government Protection Key Resource Network Externalities Economies of Scale
- 22. Barriers to Entry Government Protection Key Resource Network Externalities Economies of Scale
- 25. New Drugs 10Years of Testing before Approval 10Years of Monopoly
- 26. Network Externalities The more who use it The more valuable it becomes
- 27. Natural Monopoly One fi rm can supply entire market at a lower average cost than two or more fi rms
- 28. Natural Monopoly The more I make the lower my costs Large Fixed Costs
- 29. Is competition always good? Sometimes it can lead to higher prices
- 30. Monopoly Output and Price Lower Price: Good: Sell More Bad: Less Revenue Per Unit
- 31. Q P Perfect Competition Marginal Cost MC Average Cost ATC Total Cost $ Quantity Pro fi t Demand=MR Total Revenue
- 33. Perfect Competition Monopoly Q D TR MR D TR MR 1 2 3 4 5 Monopoly:To get more Quantity must lower price $3 $3 $3 $5 $5 $5 $3 $6 $3 $4 $8 $3 $3 $9 $3 $3 $9 $1 $3 $12 $3 $2 $8 -$1 $3 $15 $3 $1 $5 -$3
- 35. Monopoly Price 1 3 $5 $3 $4 $2 $1 $0 2 4 5 Price Qty TR MR $5 $3 $4 $2 $1 1 3 2 4 5 Qty $5 $8 $9 $8 $5 $5 $3 $1 -$1 -$3 Lose Gain Lose -$2 -$1 -$3 -$4 Gain $3 $4 $2 $1 Lose Gain Lose Gain Lose Gain Demand Marginal Revenue MR
- 36. Marginal Cost MC Q P Marginal Revenue MR Monopoly Average Cost ATC Cost $ Q Pro fi t Demand Deadweight Loss Consumer Surplus 1. MR=MC? 2.TR= P x Q 3.TC=ATC x Q 4. Pro fi t =TR-TC or (P-ATC) x Q
- 39. Riyadh Pizza Company Saudi Style Supreme 0 10 20 30 40 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Monopoly with Price Discrimination Monopoly Marginal Cost 29 Price Marginal Revenue 30 Perfect Competition Price 36
- 40. Riyadh Pizza Company Saudi Style Supreme Marginal Cost 29 0 10 20 30 40 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Price 36 Total Pro fi t 7 x 3 = 21 Monopoly with Coupon Deadweight Loss Charge higher price to increase pro fi ts Price with coupon 36 - 4 = 32 Add Pro fi t 2 x 3 = 6 New Total Pro fi t 21 + 6 = 27 Coupon Price 32