Class Notes (1,100,000)
CA (650,000)
Western (60,000)
ECON (1,000)
Lecture 11

Economics 1021A/B Lecture Notes - Lecture 11: Variable Cost, Fixed Cost, Marginal Cost


Department
Economics
Course Code
ECON 1021A/B
Professor
Michael Parkin
Lecture
11

This preview shows half of the first page. to view the full 1 pages of the document.
Chapter 13: Monopoly
Price discrimination: selling different units to different people at different prices
oMonopoly needs to be able to identify different groups
oSell a product that cannot be resold
Monopoly can discriminate
oAmong groups of buyers
oAmong units of a good
Price discrimination allows a firm to convert consumer surplus into producer surplus
oEconomic profit = total revenue – total cost
oProducer surplus = total revenue – total variable cost
Total revenue = producer surplus + total variable cost
oEconomic profit = (producer surplus + total variable cost) – total cost
oEconomic profit = producer surplus – total fixed cost
Marginal cost pricing rule: govt sets the price at marginal cost
Average pricing rule:
Don’t focus too much for exam
You're Reading a Preview

Unlock to view full version