monopoly Flashcards
1
Q
efficiency condition
A
consumer’s willingness to pay for the good at the margin = marginal cost
2
Q
why are monopolies inefficient
A
They consider intra-marginal units. MR is negative since they face a downward sloping demand curve (therefore must lower the price to increase q sold).
3
Q
quantifying loss of monopoly
A
deadweight loss to society. How society values the extra quantity. Difference in TS between perfectly competitive and monopolistic outcome
4
Q
why a monopoly may exist
A
Large MES … Natural monopoly
Weak anti-trust laws
5
Q
Two part tariff assumptions
A
Only one kind of ride
Only go to the park for the rides
Identical consumers
Constant mc(q) = c
