2019年微观经济学培训讲义.ppt

* * Note that a competitive firm has the output effect but not the price effect: the competitive firm does not need to reduce its price in order to sell a larger quantity, so, for the competitive firm, MR = P. * * Here, we assume constant marginal cost for simplicity. PM and QM denote the monopoly price and quantity, respectively. PC and QC denote the competitive price and quantity, respectively. * * It’s worth mentioning the following: Most people know that monopoly changes the way the economic “pie” is divided: by charging higher prices, the monopoly gets more surplus and consumers get less surplus. The analysis on this slide shows that the monopoly also reduces the size of the economic pie – by producing less than the socially efficient quantity and causing a deadweight loss. * * To keep the graph simple, this example assumes constant marginal cost. * * Here, there is no horizontal price line. The “price line”, if you will, is the demand curve: At each Q, the height of the demand curve shows the marginal buyer’s willingness to pay, which is the price the monopolist charges that buyer under perfect price discrimination. * * In this example, the firm is not charging different prices to different customers, but charging different prices to the same customer based on that customer’s declining willingness to pay for additional units. * Examples of monopolistic competition are everywhere: the clothes students wear, the frappaccinos they slurp up on their way to class, the magazines they read, the nightclubs where they dance. As a result, students find the theory of monopolistic competition more relevant than the theory of perfect competition, which best describes products like wheat and soybeans, products that few students ever consider buying. The last part of the chapter, on advertising and brand names, is especially interesting useful for business students. If students are reasonably comfortable with the material on perfect