1 / 13

Monopoly 2

Monopoly 2. Price Discrimination. Types of Price Discrimination. Not related to Unit Cost of Production. Most Common. Price Discrimination by a Monopoly - Conditions.

eliza
Download Presentation

Monopoly 2

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Monopoly 2

  2. Price Discrimination

  3. Types of Price Discrimination Not related to Unit Cost of Production Most Common

  4. Price Discrimination by a Monopoly - Conditions

  5. Deregulation = The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry

  6. Long Run Equilibrium Price Discriminating Monopoly (operating as a monopolist in the domestic market and facing perfect competition in the foreign export market) MC P AC P1 B A P2 D/AR/MR (Abroad) MR (Home) D/AR (Home) 0 Q Qb Qa

  7. Explanation of Diagram • Key Rule for Profit Maximisation for a Price Discriminating Monopolist = MC = MR (home) = MR (abroad) – at point A • The firm aims to maximise profits and will produce in total Qa to sell in both the domestic and export market. • The firm must then decide how much it should sell on the home market and how much should it sell abroad in order to maximise profits. • It will provide 0 to Qbto sell at home at a price of P1 as the MR up to point B is greater selling at home than abroad. • It will then switch at point B (where MR home = MR abroad) to selling the remainder of its output abroad, between Qb and Qaat a price of P2as the MR abroad is now greater than the MR at home.

  8. Explanation of Long Run Equilibrium of Monopoly

More Related