微观经济学及财务管理知识分析.pptx
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1、Chapter 10Market Power:Monopoly and Monopsony1Chapter 1Topics to be DiscussednMonopolynMonopoly PowernSources of Monopoly PowernThe Social Costs of Monopoly Power2Chapter 1Topics to be DiscussednMonopsonynMonopsony PowernLimiting Market Power: The Antitrust Laws3Chapter 1Perfect CompetitionnReview o
2、f Perfect CompetitionlP = LMC = LRAClNormal profits or zero economic profits in the long runlLarge number of buyers and sellerslHomogenous productlPerfect informationlFirm is a price taker4Chapter 1Perfect CompetitionQQPPMarketIndividual FirmDSQ0P0P0D = MR = Pq0LRACLMC5Chapter 1MonopolynMonopoly1) O
3、ne seller - many buyers2) One product (no good substitutes)3) Barriers to entry6Chapter 1MonopolynThe monopolist is the supply-side of the market and has complete control over the amount offered for sale.nProfits will be maximized at the level of output where marginal revenue equals marginal cost.7C
4、hapter 1MonopolynFinding Marginal RevenuelAs the sole producer, the monopolist works with the market demand to determine output and price.lAssume a firm with demand:uP = 6 - Q8Chapter 1Total, Marginal, and Average Revenue$60$0-515$5$54283433913248-12155-31TotalMarginalAveragePriceQuantityRevenueReve
5、nueRevenuePQRMRAR9Chapter 1Average and Marginal RevenueOutput0123$ perunit ofoutput12345674567Average Revenue (Demand)MarginalRevenue10Chapter 1MonopolynObservations1) To increase sales the price must fall2) MR MC).nAt output levels above MR = MC the increase in cost is greater than the decrease in
6、revenue (MR MClPerfect CompetitionP = MC29Chapter 1MonopolynMonopoly pricing compared to perfect competition pricing:lThe more elastic the demand the closer price is to marginal cost.lIf Ed is a large negative number, price is close to marginal cost and vice versa.30Chapter 1Astra-Merck Prices Prilo
7、secn1995lPrice of Prilosec = $3.50/daily doselPrice of Tagamet and Zantac = $1.50 - $2.25/daily doselMC of Prolosec = 30 - 40 cents/daily doseThe Monopolists Output Decision31Chapter 1Astra-Merck Prices PrilosecThe Monopolists Output Decision89. 3$09.35.91.11 . 11135.11MCEMCPDPrice of $3.50 is consi
8、stent with “the rule of thumb pricing”32Chapter 1MonopolynShifts in DemandlIn perfect competition, the market supply curve is determined by marginal cost.lFor a monopoly, output is determined by marginal cost and the shape of the demand curve.33Chapter 1D2MR2D1MR1Shift in Demand Leads toChange in Pr
9、ice but Same OutputQuantityMC$/QP2P1Q1= Q234Chapter 1D1MR1Shift in Demand Leads toChange in Output but Same PriceMC$/QMR2D2P1 = P2Q1Q2Quantity35Chapter 1MonopolynObservationslShifts in demand usually cause a change in both price and quantity.lA monopolistic market has no supply curve.36Chapter 1Mono
10、polynObservationslMonopolist may supply many different quantities at the same price.lMonopolist may supply the same quantity at different prices.37Chapter 1MonopolynThe Effect of a TaxlUnder monopoly price can sometimes rise by more than the amount of the tax.nTo determine the impact of a tax:lt = s
11、pecific taxlMC = MC + tlMR = MC + t : optimal production decision38Chapter 1Effect of Excise Tax on MonopolistQuantity$/QMCD = ARMRQ0P0MC + taxtQ1P1PIncrease in P: P0P1 increase in tax39Chapter 1nQuestionlSuppose: Ed = -2lHow much would the price change?Effect of Excise Tax on Monopolist40Chapter 1n
12、AnswernWhat would happen to profits? tax. theby twice increases Price22)(2 toincreases If22If11tMCtMCPtMCMCMCPEEMCPddEffect of Excise Tax on Monopolist41Chapter 1MonopolynThe Multiplant FirmlFor many firms, production takes place in two or more different plants whose operating cost can differ.42Chap
13、ter 1MonopolynThe Multiplant FirmlChoosing total output and the output for each plant:uThe marginal cost in each plant should be equal.uThe marginal cost should equal the marginal revenue for each plant.43Chapter 1MonopolynAlgebraically:212211Output Total2Plant for Cost &Output &1Plant for Cost &Out
14、put &QQQCQCQTThe Multiplant Firm44Chapter 1MonopolynAlgebraically:0)()()(11112211QCQPQQQCQCPQTTThe Multiplant Firm45Chapter 1MonopolynAlgebraically:11110)()()(MCMRQCMCQPQMRTThe Multiplant Firm46Chapter 1MonopolynAlgebraically:2121MCMCMRMCMRMCMR47Chapter 1Production with Two PlantsQuantity$/QD = ARMR
15、MC1MC2MCTMR*Q1Q2Q3P*48Chapter 1Production with Two PlantsnObservations:1)MCT = MC1 + MC22)Profit maximizing output:uMCT = MR at QT and P *uMR = MR*uMR* = MC1 at Q1, MC* = MC2 at Q2uMC1 + MC2 = MCT, Q1 + Q2 = QT, and MR = MC1 + MC2 Quantity$/QD = ARMRMC1MC2MCTMR*Q1Q2Q3P*49Chapter 1Monopoly PowernMono
16、poly is rare.nHowever, a market with several firms, each facing a downward sloping demand curve will produce so that price exceeds marginal cost.50Chapter 1Monopoly PowernScenario:lFour firms with equal share (5,000) of a market for 20,000 toothbrushes at a price of $1.50.51Chapter 1Quantity10,0002.
17、00QA$/Q$/Q1.501.0020,00030,0003,0005,0007,0002.001.501.001.401.60At a market priceof $1.50, elasticity ofdemand is -1.5.Market DemandThe Demand for ToothbrushesThe demand curve for Firm Adepends on how muchtheir product differs, andhow the firms compete.52Chapter 1At a market priceof $1.50, elastici
18、ty ofdemand is -1.5.Quantity10,0002.00QA$/Q$/Q1.501.0020,00030,0003,0005,0007,0002.001.501.001.401.60DAMRAMarket DemandFirm A sees a much more elastic demand curve due tocompetition-Ed = -.6. StillFirm A has some monopoly power and charges a pricewhich exceeds MC.MCAThe Demand for Toothbrushes53Chap
19、ter 1Monopoly PowernMeasuring Monopoly PowerlIn perfect competition: P = MR = MClMonopoly power: P MC54Chapter 1Monopoly PowernLerners Index of Monopoly PowerlL = (P - MC)/PuThe larger the value of L (between 0 and 1) the greater the monopoly power.lL is expressed in terms of EduL = (P - MC)/P = -1/
20、EduEd is elasticity of demand for a firm, not the market55Chapter 1Monopoly PowernMonopoly power does not guarantee profits.nProfit depends on average cost relative to price.nQuestion:lCan you identify any difficulties in using the Lerner Index (L) for public policy?56Chapter 1Monopoly PowernThe Rul
21、e of Thumb for PricinglPricing for any firm with monopoly power uIf Ed is large, markup is smalluIf Ed is small, markup is largedEMCP1157Chapter 1Elasticity of Demand and Price Markup$/Q$/QQuantityQuantityARMRMRARMCMCQ*Q*P*P*P*-MCThe more elastic isdemand, the less themarkup.58Chapter 1Markup Pricin
22、g:Supermarkets to Designer JeansnSupermarketsMC. above 11%-10 about set Prices stores individual for 3.product Similar 2.firms Several 1. 5)(11. 19 . 01 .11. 410MCMCMCPEd59Chapter 1nConvenience StoresMC. above 25% about set Prices 3.them atesdifferenti eConvenienc 2.tssupermarke than prices Higher 1
23、. 5)(25. 18 . 0511. 45MCMCMCPEdMarkup Pricing:Supermarkets to Designer Jeans60Chapter 1nConvenience stores have more monopoly power.nQuestion:lDo convenience stores have higher profits than supermarkets?Markup Pricing:Supermarkets to Designer JeansConvenience Stores61Chapter 1lDesigner jeansEd = -3
24、to -4uPrice 33 - 50% MCuMC = $12 - $18/pairuWholesale price = $18 - $27Markup Pricing:Supermarkets to Designer JeansDesigner Jeans62Chapter 1The Pricing ofPrerecorded Videocassettes19851999TitleRetail Price($)TitleRetail Price($)Purple Rain$29.98Austin Powers$10.49Raiders of the Lost Ark24.95A Bugs
25、Life17.99Jane Fonda Workout59.95Theres Something about Mary13.99The Empire Strikes Back79.98Tae-Bo Workout24.47An Officer and a Gentleman24.95Lethal Weapon 416.99Star Trek: The Motion Picture 24.95Men in Black12.99Star Wars39.98Armageddon15.8663Chapter 1nWhat Do You Think?lShould producers lower the
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