MicroEconomics theory and application 12th by browning an zupan chapter 11
Bạn đang xem bản rút gọn của tài liệu. Xem và tải ngay bản đầy đủ của tài liệu tại đây (747.87 KB, 41 trang )
Prepared by Dr. Della Lee Sue, Marist College
MICROECONOMICS: Theory & Applications
Chapter 11: Monopoly
By Edgar K. Browning & Mark A. Zupan
John Wiley & Sons, Inc.
12th Edition, Copyright 2013
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Learning Objectives
Define monopoly and show what a monopolist’s
demand and marginal revenue curves look like.
Explain why a monopolist’s profit-maximizing
output is where marginal revenue equals marginal
cost. Describe why the extent to which a
monopolist’s price exceeds marginal cost is larger
the more inelastic the demand faced by the
monopolist.
(continued)
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
2
Learning Objectives
(continued)
Explain several important implications of
monopoly analysis such as that the shutdown
condition applies to monopolies as well as to firms
operating in perfectly competitive environments.
Outline the potential sources of monopoly power:
absolute cost advantages, economies of scale,
product differentiation, and regulatory barriers.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
3
Learning Objectives
(continued)
Explore the efficiency effects of monopoly from
static and dynamic perspectives.
Provide an overview of public policy toward
monopoly.
Explain the mathematics behind monopoly.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
4
Define monopoly and show what a monopolist’s demand and marginal
revenue curves look like.
11.1 THE MONOPOLIST’S DEMAND
AND MARGINAL REVENUE CURVES
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
5
Terminology
Monopoly – a market with a single seller
Monopoly power – some ability to set price above
marginal cost
Price maker – a monopoly that supplies the total
market and can choose any price along the market
demand curve that it wants
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
6
The Monopolist’s Demand and Marginal
Revenue Curves
Demand curve
market demand
average revenue
Marginal revenue:
effect on total revenue due to change in output
decreases as output increases
less than price when demand curve slopes downward
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
7
Figure 11.1 - The Monopolist’s (Mad
Men co-stars) Demand Curve
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
8
Table 11.1
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
9
Explain why a monopolist’s profit-maximizing output is where marginal
revenue equals marginal cost. Describe why the extent to which a
monopolist’s price exceeds marginal cost is larger the more inelastic the
demand faced by the monopolist.
11.2 PROFIT-MAXIMIZING OUTPUT
OF A MONOPOLY
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
10
Profit-Maximizing Output of a
Monopoly
Marginal revenue is always less than price when
the demand curve slopes downward.
Profit is maximized where MR=MC:
If MR>MC, then profits will increase if output is increased.
If MR
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
11
Table 11.2
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
12
Figure 11.2 - Profit-Maximization: Total
and Per-Unit Curves
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
13
Figure 11.3 - Profit Maximization
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
14
The Monopoly Price and Its Relationship
to Elasticity of Demand
The smaller the demand elasticity, the greater the
profit-maximizing price, relative to marginal cost.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
15
Derivation of Price Formula
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
16
Figure 11.4 - The Inverse Elasticity
Pricing Rule
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
17
Explain several important implications of monopoly analysis such as that
the shutdown condition applies to monopolies as well as to firms
operating in perfectly competitive environments.
11.3 FURTHER IMPLICATIONS OF
MONOPOLY ANALYSIS
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
18
Further Implications of Monopoly
Analysis
A monopoly has no supply curve.
A monopoly does not necessarily make positive
economic profit.
A monopoly’s demand curve is elastic where
marginal revenue is positive.
A profit-maximizing monopolist will always sell at
a price where demand is elastic.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
19
Figure 11.5 - Monopoly and the
Shutdown Condition
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
20
Figure 11.6 - Monopoly Demand,
Marginal Revenue, and Total Revenue
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
21
Outline the potential sources of monopoly power: absolute cost
advantages, economies of scale, product differentiation, and regulatory
barriers.
11.4 THE MEASUREMENT AND
SOURCES OF MONOPOLY POWER
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
22
Figure 11.7 - Monopoly Power When
There are Several Suppliers
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
23
Measuring Monopoly Power
Lerner Index – a means of measuring a firm’s
monopoly power that takes the markup of price
over marginal cost expressed as a percentage of a
product’s price:
Lerner Index = (P – MC)/P
(3)
The Lerner index varies between zero and one.
The larger the Lerner index value, the greater a
firm’s monopoly power.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
24
Sources of Monopoly Power
What factors determine the extent to which a firm
has monopoly power?
The elasticity of the market demand curve
If the market demand curve is perfectly elastic, any
individual supplier has no monopoly power.
The elasticity of supply by other firms
The monopoly power of any one firm is more limited
when there is a greater number of rival firms.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
25
