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ECON 1010 (72)
Chapter 4

ECON 1010 Chapter 4: Topics 20
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Department
Economics
Course
ECON 1010
Professor
Laura K.Brown
Semester
Spring

Description
OS98 ECON101 0 In terms of total surplus: a quota and tariff can both lead to the same prices and quantities and generate a deadweight loss of area I + K (if they are set to mimic each other). Whats different is what goes on behind the policies. 3.IMPERFECTLY COMPETITIVE MARKETS MARKET POWER: MONOPOLY Imperfectly competitive markets are those who fail to meet at least one requirement of a perfectly competitive market. Pricetaking firms can sell as much as they want at the current market price. However, if they increase the price, they lose all their sales. This means that the demand curve for the individual firm is horizontal (perfectly elastic). Firms with market power are said to be pricemakers (pricesetters) in that they have the ability to set their own prices. This means that when the pricesetting firm increases the price, it does not lose all its customers. This means the demand curve for a pricesetting is downward sloping.
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