EC238 Lecture Notes - Lecture 4: Inverse Demand Function, Natural Monopoly, Dynamic Efficiency
Document Summary
Under perfect competition the market outcome is efficient. Ts= cs+ps (refer to ntoes for s&d curve) In some cases, market fails it is unable to allocate/organize a society"s resources efficiently. There are four important sources of market failures. Economic classification of goods and services based on excludability and rivalness criteria: (refer to notes for table) Mec additional cost of production for producing one more unit that is borne by the firm. By assumption, mcs, mcp and mec increases as more is produced (refer to notes for externality curve) Public goods are non rival and non excludable goods. Horizontal summation of individual demand market demand for the product (refer to notes for curves) vertical summation of individual demand market demand for the product. Monopoly goods single seller for the entire market it faces the entire market demand different types of monopoly natural monopoly single price monopoly price discriminating monopoly (see notes for natural and single price monopoly curve)
