ECO 1104 Lecture 1: ECO1104 B Chapter 15 Class Notes.docx

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: David Gray

Document Summary

What price making behavior doesn"t mean: a monopolist can"t set both p and q: if it could, it would want to move to to the ne of price quantity space ad infinitum, a monopolist has to operate on its demand curve, but it can locate anywhere it wants to on it, so theoretically many possible prices could be changed. Q , as functions of q, the level of output: if d shifts, then mr and tr will shift as well, if the firm were perfectly competitive, the p and the mr columns would read 11 all the way down. P > mc for the last unit produced so monopoly under produces compared to perfect competition: figure 15. 7, the monopolist produces less than the socially efficient level of output where the value to demanders at the margin = value to producers at the margin, this entails a deadweight loss, social surplus would increase if more output were to be produced.