a r r r
r e i i
marketfailure is an externality uncompensated impact of one person'sactions on the wellbeingof a6g
sta
market failure
Reasons for it
a marketpower
41 asymmetricinformation
41 externalities
41 publicgoods
4 marketPower monopoly i sewer noclosesubstitute au power a
marketstructures 1 oligopoly fewsellers dividepower market
power
monopolisticcompetition manysellerswith slightly products
monopoly
monopoly iseller nodosesubstitutes
them barrierstoentry
reasonfor monopolyresources iownerof essentialresource
governmentregulation 1 firmsinglerightto produce e
g patents copyrightlicense
productionprocess lowercost ofproduction eg Haodistribution
naturalmonopoly i firmcansupplytoentiremarket atlowercostthanmoreArns
can
businessstrategies marketing forcedistributortoseayourproduct
Production pricingdecisions
monopolyvscompetition s si
competion no influenceinpricing
p demandcurve ismarketsdemand
perfectlymany cansellas my curve
elastic
substitutes littleateprice
oras D PP dQ
Q Q monopoly
competitive monopoly p go constrained
firm Tripaduetoproduction
monopoly'srevenue p MSR
is lessthantheprice of itsgood
monopolist's marginalrevenue downwarddemandcurve
whenmonopolyT Q effect on totalrevenue Pia
Q P TR avgRMarsRev
outputeffect 9output ra T TR
5 6 30 6 a
priceeffect dP d tr
6 s so 5 o
marginalrevenue can be negative p MGR
7 y 28 4 2
afterestunit marginalrevenue is lessthanpriceofgood 8 3 24 3 4
marginalrevenue curve is belowdemand curve
monopoly marginalRevenue increase in revenue when 1more
p
unitis sold
startonsame point TR PxQ
as MargRevenue
ofest Daiaveragerevenue
unitsold priceofgood
Q
it canbenegative whenpriceeffect onrevenue
J
marginal isgreater thanoutputeffect
revenue
1
whenextraunitofoutput
marginalrevenuelessthan pricefallsenoughtocause
priceofgood totalrevenuetodecline though
firmsellsmoreunits
r e i i
marketfailure is an externality uncompensated impact of one person'sactions on the wellbeingof a6g
sta
market failure
Reasons for it
a marketpower
41 asymmetricinformation
41 externalities
41 publicgoods
4 marketPower monopoly i sewer noclosesubstitute au power a
marketstructures 1 oligopoly fewsellers dividepower market
power
monopolisticcompetition manysellerswith slightly products
monopoly
monopoly iseller nodosesubstitutes
them barrierstoentry
reasonfor monopolyresources iownerof essentialresource
governmentregulation 1 firmsinglerightto produce e
g patents copyrightlicense
productionprocess lowercost ofproduction eg Haodistribution
naturalmonopoly i firmcansupplytoentiremarket atlowercostthanmoreArns
can
businessstrategies marketing forcedistributortoseayourproduct
Production pricingdecisions
monopolyvscompetition s si
competion no influenceinpricing
p demandcurve ismarketsdemand
perfectlymany cansellas my curve
elastic
substitutes littleateprice
oras D PP dQ
Q Q monopoly
competitive monopoly p go constrained
firm Tripaduetoproduction
monopoly'srevenue p MSR
is lessthantheprice of itsgood
monopolist's marginalrevenue downwarddemandcurve
whenmonopolyT Q effect on totalrevenue Pia
Q P TR avgRMarsRev
outputeffect 9output ra T TR
5 6 30 6 a
priceeffect dP d tr
6 s so 5 o
marginalrevenue can be negative p MGR
7 y 28 4 2
afterestunit marginalrevenue is lessthanpriceofgood 8 3 24 3 4
marginalrevenue curve is belowdemand curve
monopoly marginalRevenue increase in revenue when 1more
p
unitis sold
startonsame point TR PxQ
as MargRevenue
ofest Daiaveragerevenue
unitsold priceofgood
Q
it canbenegative whenpriceeffect onrevenue
J
marginal isgreater thanoutputeffect
revenue
1
whenextraunitofoutput
marginalrevenuelessthan pricefallsenoughtocause
priceofgood totalrevenuetodecline though
firmsellsmoreunits
