Microeconomics Corso E

1. MicroeconomicsCorso E John Hey

2. Chapter 28 • Monopoly • A single seller in a market ... ...can choose the price (and the quantity) • but must take into consideration the demand for the good. • Monopsony • A single seller in a market ... ..can choose the price (and the quantity) • but must take into consideration the supply of the good .

3. Remember Chapter 13?

4. Monopoly • A single seller in a market. • Suppose that the demand curve for the good is given by: • p = α – β y (i.e. is linear) • Total Revenue R = py = αy – β y2 • Is a concave quadratic function. • Marginal Revenue = dR/dy = α – 2β y • The slope of the marginal revenue curve is twice the slope of the demand curve.

9. Monopsony • A single seller in a market (for example, a labour market). • Suppose that the supply curve in the market is (drop the subscript): • w = γ + δ q(i.e. is linear) • Total Cost C = F + wq = F + γq + δ q2 • Marginal Cost = dC/dq= γ + 2δ q • The slope of the Marginal Cost curve is twice the slope of the supply curve.

14. Minimum Wage Legislation

15. Chapter 28 • Goodbye!