Monopoly:
Sources of Monopoly:
a) Control of Scarce Inputs (OPEC, DeBeers etc.)
b) Patents or Franchise / License Scheme (RN, MD, McDonald’s, Burger King etc.)
c) Government Enforced Barriers (NFL, MLB, NBA etc.)
d) Large Economies of Scale- Natural Monopoly
e) Merger and Acquisition (M&A)
f) Illegal ways to sustain monopoly power (Bribe, Lobby, Patent killing, etc.)
Short-Run Analysis:
a) Derivation:
MR (Q)= dTR (Q)/dQ= (P+Q) (dP/dQ) and FOC of profit maximization is MR(Q) = MC(Q)
So, P= MRQ –Q(dP/dQ)> MC(Q)(dP/dQ <0)
Marginal cost and price elasticity of demand: Inverse Elasticity Pricing Rule (IEPR)
At point M, MR(Q) = MC(Q). According to Amoroso-Robinson formula, we know:
The l.h.s. of above equation is the monopolist’s optimal markup of price over marginal cost, expressed as a percentage of the price.
For this reason, this equation is called the inverse elasticity pricing rule(IEPR). And l.h.s. is called Lerner Index of market power.
Monopolist’s Demand for Inputs:
If the input market is competitive then this monopolist must take prices of inputs as given. We can simply derive the relationship using profit as a function of L and K not Q. Let TR(⋅) and TC(⋅) denote total revenue and total cost function, respectively. Then, we know:
TR = TR(Q) = TR( f (L, K)) and TC = wL + rK . Based upon these expressions, we can get
π = π (L, K) = TR(L, K) − TC(L, K)
(some textbooks are using MPP (marginal physical product) instead of MP) So, the final expression can be:
MRPL (L,K)= MR(Q). MPL (L, K) = w
MRP K(L,K)= MR(Q). MP K (L, K)= r
where MRP is marginal revenue product, which is similar to VMP (value of marginal product, P⋅ MP ) in perfectly competitive goods market.
Now, we need to think how equation (1) is related to MR(Q) = MC(Q) . We have total cost function TC(Q) = C( f (L,K)) ≡ wL + rK .
Differentiating this function w.r.t L and K,
2º: SOC would be MRP MRP LL KK < 0, < 0
Latest technology based Microeconomics Online Tutoring Assistance
Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Microeconomics help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Microeconomics, project ideas and tutorials. We provide email based Microeconomics help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Microeconomics. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Microeconomics Homework help and assignment help services. They use their experience, as they have solved thousands of the Microeconomics assignments, which may help you to solve your complex issues of Microeconomics. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.
Alpine and Aquatic Biomes tutorial all along with the key concepts of Alpine Biomes, Freshwater Biomes, Ocean or Marine Biomes, Marine Rocky Shore, Marine Sandy Beach, Mangrove Swamp, Coral Reef, Continental Shelf
Nature and Scope of Error tutorial all along with the key concepts of Definitions of Errors, Types of Errors, Gross Errors, Random Errors, Systematic errors, Methodic Errors and Tackling Systematic Errors
tutorsglobe.com oil plant–groundnut assignment help-homework help by online economic importance tutors
tutorsglobe.com bones and joints assignment help-homework help by online human physiology tutors
Positive Feedback tutorial all along with the key concepts of Nyquist Criterion, Gain and Phase Margins, stability of feedback amplifier, Nyquist criterion for stability, Nyquist curve, Barkhausen criterion for oscillation
www.tutorsglobe.com offers Go to in Disciplined Manner homework help, assignment help, case study, writing homework help, online tutoring assistance by computer science tutors.
www.tutorsglobe.com offers computer programming homework help, computer programming assignment help, computer programming projects help and solutions, by online programming tutors.
Experimental crystal structure determination tutorial all along with the key concepts of Laue method, Rotating Crystal Technique and Powder method
identification of the fault in a given tv receiver - the tv receiver is switched on firstly. there is no picture; just vertical lines are exist on the screen. switch off the receiver instantaneously and verify vertical line fault on the tv receiver.
Theory and lecture notes of Rest of the Growth Model all along with the key concepts of the rest of the growth model, efficiency of labor, labor force, efficiency of labor, theory of Economic Growth. Tutorsglobe offers homework help, assignment help and tutor’s assistance on Rest of the Growth Model.
biology tutorial tutorial all along with the key concepts of detection of virus infected cells, cultivation, purification of viral particles, centrifugation, sedimentation coefficient, types of sedimentation medium, methods for assessing the purity of virions and identification of a viral particle
Nervous coordination in animals tutorial all along with the key concepts of Divisions of Nervous System, Brain, Spinal cord, Functions of spinal cord, Peripheral Nervous System, Structure of Neuron, Reflex Action and Sensory Receptors
tutorsglobe.com occurrence and principles of extraction of copper assignment help-homework help by online first transition series tutors
tutorsglobe.com galactosemia assignment help-homework help by online inborn errors of metabolism tutors
Volumetric Analysis tutorial all along with the key concepts of Principle, Requirements, Procedure, Observations and Results, Treatment of Results, Experiment 2B
1960029
Questions Asked
3689
Tutors
1460988
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!