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Lecture 22

ECON101 Lecture 22: Week 9 / Mar 13 - Monopoly, midterm 2
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Department
Economics
Course
ECON101
Professor
Gordon Lee
Semester
Winter

Description
Week 9 / March 13, 2017 Policy Application: The Market for Human Kidneys Policy Question: Should people be allowed to sell their own Kidneys? If kidneys could be sold P*, Q* CS = 1+3 PS = 2+4 _____________________________ Net Benefits = 1+2+3+4 If Kidneys can only be donated P=0 Q=Qo CS = 1+2 PS = 0____ DWL 3+4 N.B = 1+2 How does a monopoly maximize profits? As long as MR > MC, then producing another unit will ↑ profits. (Profit maximizing quantity) When MR = MC, the monopolist looks to the demand curve to see what price that corresponds to. At that point, profit is MONOPOLY maximized. A pure monopoly exists when: (Sources of monopoly power) 1) There is one seller in the mkt for some commodity/service and there are no close substitutes for this go
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