ECO204Y1- Final Exam Guide - Comprehensive Notes for the exam ( 58 pages long!)

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29 Mar 2018
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Examples of public policies to reduce monopoly dwl: per-unit subsidy use per-unit subsidy so that mc=mr where supply = demand. Challenges regulating natural (mc = 0) monopolies: minimum efficient scale > market size, efficient outcome: demand = mc leads to negative profits meaning firm(s) exit(s, entry of a 2nd firm increases ac and decreases total surplus. Conditions for price discrimination: firms must have power to set prices above marginal cost, firms must be able to identify how much to charge which customer for how many items, resales must be controllable. Firms that price discriminate can be a monopoly in either markets or a competitive firm in the first and a monopoly in the second market: the firm wants to sell in the market it achieves the higher mr. Regulating monopolist using price ceiling monopolist produces at qc price ceiling forces mr of.

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