MGEA01H3 Lecture Notes - Lecture 9: Natural Monopoly, De Beers, Monopolistic Competition

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA01H3
• Professor: Michael Ho

Document Summary

Textbook: microeconomics, second canadian edition, by krugman, wells, au and parkinson. The significance of monopoly, where a single monopolist is the only producer of a good. How a monopolist determines its profit-maximizing output and price. The difference between monopoly and perfect competition, and the effects of that difference on society"s welfare. How policymakers address the problems posed by monopoly. What price discrimination is, and why it is so prevalent when producers have market power. In order to develop principles and make predictions about markets and how producers will behave in them, economists have developed four principal models of market structure: monopoly, oligopoly, perfect competition, monopolistic competition. The system of market structures is based on two dimensions: the number of producers in the market (one, few, many), whether the goods offered are identical or differentiated. Differentiated goods: are goods that are different but considered somewhat substitutable by customers.