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EC-0005 (25)
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Monopoly.docx

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Department
Economics
Course
EC-0005
Professor
George Norman
Semester
Spring

Description
04/10/2014 SECTION 9 *slide 23 & 24 (illustrates deadweight loss) *29 (merger vs. monopoly) Monopoly  Network externalities: situation when usefulness of product increases with number of consumers who use it Natural monopoly: economies of scale so large that one firm can supply entire market at lower ATC than 2+  firms  Demand curve D curve of firm = D curve for the product Price elasticity = 1 when TR is maximized Marginal principle Stage 1: choose output level at which MC = MR Stage 2: market then determines the ket clearing price  form the demand function Mergers Horizontal merger: between firms in same industry Vertical merger: between firms at different stages of production of a good Measure of concentration: concentrated if a relatively small number of firms have a large share of total  sales in the market Higher concentration, likelier that merger increases market power Herfinda
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