ECON 200 Lecture Notes - Lecture 10: Patent Office, Economic Surplus, United States Postal Service

• School: University of Arizona
• Department: Economics
• Course: ECON 200
• Professor: Jinyeong Sohn

Document Summary

Social surplus: consumer surplus (cs): the area between the demand curve and price, producer surplus (ps): the area between the supply curve and price, social surplus (ss): the sum of consumer surplus and producer surplus (ss. =cs + ps): ss is maximized when the market is perfectly competitive, social welfare: the overall well-being of people in the economy. Monopoly can occur under the following situations: legal restrictions: patent, copyright, license. It is only profitable when there is one firm. Economies of scale is an important feature of the market. For example, electricity, the transmission of electricity (wires): control of essential resources: for example, diamond; professional sports leagues try to block the entry by signing the best athletes to long-term contracts; china is a monopoly supplier of pandas. Mc & mr: because a monopoly supplies the entire market, the demand for goods or services produced by a monopolist is also the market demand, in the monopolized market, p = ar.