ECO101H1 Lecture Notes - Lecture 22: Demand Curve, Market Power, Outlet Store
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An author receives royalties equal to 15% of the revenues from the sale of her books. Which is higher: the price the publisher would set, the price the author wants the publisher to set. Author would set the revenue-maximising price (which is lower) See diagram (assume mc of producing a book is ) There are customers who would never pay the full price for a lacoste shirt, but would purchase a second at a significantly lower price. Lacoste may deliberately pull threads or equivalent, to create seconds and thus segment its market. Appliance firm: sells refrigerator for , once a year, sells dented/scratched refrigerators for . Question: would this firm, to maximise profits, ever deliberately dent/scratch refrigerators: not perfectly competitive firm. A monopolist is in the long-run equilibrium (means its profit maximising) and earning economic profits equal to million. The monopolist"s economic profits will now be zero: no.
