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Lecture Comments (15)

2 answers

Last reply by: Rebecca Dai
Sun Nov 9, 2014 7:33 PM

Post by Rebecca Dai on November 6, 2014

And in the last example, if ATC shifts down, the DWL area is actually getting smaller. Why doesn't it change? Thanks.

1 answer

Last reply by: Professor Jibin Park
Thu Nov 6, 2014 11:44 PM

Post by Rebecca Dai on November 6, 2014

at 36:35, if my price is in the elastic portion but on the right of optimal quantity, is the TR still gonna go down as the price increases? But it is going towards the optimal situation at this point.

1 answer

Last reply by: Professor Jibin Park
Thu Nov 6, 2014 11:44 PM

Post by Rebecca Dai on November 6, 2014

Professor, how do we know if we should draw a horizontal line or curves as MC and ATC?

0 answers

Post by Rebecca Dai on November 6, 2014

At 23:00, why is quantity produced Q3? Shouldn't it vary when price varies so that there is no one correct answer?

2 answers

Last reply by: Rebecca Dai
Fri Nov 7, 2014 6:38 PM

Post by Rebecca Dai on November 6, 2014

In monopoly, why is P > MR? Shouldn't they be equal?

1 answer

Last reply by: Professor Jibin Park
Thu Nov 6, 2014 11:42 PM

Post by Rebecca Dai on November 6, 2014

In perfect competition (8:08), if the firms produce Q at which P=MC, how do they maximize profit? There is no profit. Is perfect competition just ideal and nothing similar exists in the real world?

0 answers

Post by Professor Jibin Park on April 16, 2014

Price ceilings and floors would serve as the new de facto marginal revenue curve. For price ceilings BELOW the equilibrium price, quantity will increase. Where the price ceiling (MR) intersects the MC, is not the profit-maximizing quantity. If it's too low, a monopoly will simply not produce. But, mostly an effective price ceiling will serve to increase quantity produced and lower the price.

For price floors, you don't have to worry about it because the government generally won't set price floors for monopolies.

0 answers

Post by Harshil Bansal on April 16, 2014

What will be the impact of Price ceiling and price floors in a monopoly?

Monopoly & Public Policy

  • In perfect competition, total surplus is maximized since firms produce at the allocatively efficient point.
  • In a monopoly, total surplus is not maximized as there exists deadweight loss.
  • In a natural monopoly, economies of scale make it such that one firm producing will actually lower the ATC.
  • A monopolist, however, lacks the incentive to pass the price savings onto the consumer.
  • Two possible options to deal with a natural monopoly is public ownership or regulation.
  • Generally, a subsidy is preferable to a tax in changing a monopolist’s behavior to the socially optimal quantity.

Monopoly & Public Policy

Lecture Slides are screen-captured images of important points in the lecture. Students can download and print out these lecture slide images to do practice problems as well as take notes while watching the lecture.

  • Intro 0:00
  • Lesson Overview 0:09
  • Monopoly vs. Perfect Competition (Surplus) 1:06
    • Deadweight Loss
  • Welfare Effects of Monopoly 7:02
    • Increase Profits, Decrease Consumer Surplus
    • Perfectly Competitive Firms Profit-Maximize
    • Deadweight Loss
  • Public Ownership of Monopolies 8:50
    • In Theory
    • In Practice
  • Unregulated vs. Regulated Natural Monopoly 12:03
    • Unregulated Monopoly
    • Regulated Monopoly
  • Monopoly Practice Problem 1 18:26
  • Monopoly Practice Problem 2 21:34
  • Monopoly Practice Problem 3 24:34
  • Monopoly Practice Problem 4 26:21
  • More Monopoly Practice 1 31:50
  • More Monopoly Practice 2 34:57
  • More Monopoly Practice 3 37:17
  • More Monopoly Practice 4 39:49