lectures in microeconomics-charles w. upton the monopolist’s demand curve
Post on 20-Dec-2015
223 views
TRANSCRIPT
Lectures in Microeconomics-Charles W. Upton
The Monopolist’s Demand Curve
The Monopolist’s Demand Curve
The Monopolist’s Demand Curve
• Want to develop some key propositions about the demand curve
The Monopolist’s Demand Curve
The Monopolist’s Demand Curve
• Want to develop some key propositions about the demand curve
• Many of these center on elasticities
The Monopolist’s Demand Curve
The Monopolist’s Demand Curve
• Want to develop some key propositions about the demand curve
• Many of these center on elasticities
• Then some applications
The Monopolist’s Demand Curve
Marginal Revenue and Elasticity
• Recall our definition of point elasticity
Q
PSlope
The Monopolist’s Demand Curve
Marginal Revenue and Elasticity
• Recall our definition of point elasticity
• In the case of a linear demand function
Q = a – bP
Q
PSlope
The Monopolist’s Demand Curve
Marginal Revenue and Elasticity
• Recall our definition of point elasticity
• In the case of a linear demand function
Q = a – bP
Q
PSlope
Slope = -b
The Monopolist’s Demand Curve
Marginal Revenue and Elasticity
• A more general definition
Q
P
dP
dQ
The Monopolist’s Demand Curve
Restating the Elasticity
Q
P
dP
dQ
The Monopolist’s Demand Curve
Restating the Elasticity
P
Q
dPdQ11
Q
P
dP
dQ
The Monopolist’s Demand Curve
Restating the Elasticity
PP
Q
dPdQ
P
11
P
Q
dPdQ11
The Monopolist’s Demand Curve
Restating the Elasticity
PP
Q
dPdQ
P
11
QdQ
dPP
1
The Monopolist’s Demand Curve
Marginal Revenue and Elasticity
• The Monopolist cares about MR.
• There is a relation between MR and elasticity.
R = PQ
PQdQ
dP
dQ
dR
The Monopolist’s Demand Curve
Marginal Revenue and Elasticity
• The Monopolist cares about MR.
• There is a relation between MR and elasticity.
R = PQ
PQdQ
dP
dQ
dR
The Monopolist’s Demand Curve
Marginal Revenue and Elasticity
• The Monopolist cares about MR.
• There is a relation between MR and elasticity.
R = PQPQ
dQ
dP
dQ
dR
PMRQdQ
dP
The Monopolist’s Demand Curve
Marginal Revenue and Elasticity
PQdQ
dPMR
PMRQdQ
dP
The Monopolist’s Demand Curve
Marginal Revenue and Elasticity
PP
Q
dQ
dPPMR
PQdQ
dPMR
PMRQdQ
dP
The Monopolist’s Demand Curve
Marginal Revenue and Elasticity
1P
Q
dQ
dPPMR
PP
Q
dQ
dPPMR
PQdQ
dPMRPMRQ
dQ
dP
The Monopolist’s Demand Curve
Marginal Revenue and Elasticity
PMRQdQ
dP
1P
Q
dQ
dPPMR
PP
Q
dQ
dPPMR
PQdQ
dPMR
)1
1()11
(
PPMR
The Monopolist’s Demand Curve
First Elasticity Relation
11PMR
The Monopolist’s Demand Curve
Second Elasticity Relation
11PMR
The Monopolist’s Demand Curve
Second Elasticity Relation
11PMR
MCMR
The Monopolist’s Demand Curve
Second Elasticity Relation
11PMR
MCMR
11PMC
The Monopolist’s Demand Curve
Second Elasticity Relation
MCP 11
The Monopolist’s Demand Curve
Second Elasticity Relation
11
MCP
The Monopolist’s Demand Curve
Third Elasticity Relation
MCP 11
The Monopolist’s Demand Curve
Third Elasticity Relation
MCP 11
MCPP 1
The Monopolist’s Demand Curve
Third Elasticity Relation
MCPP 1
1PMCP
The Monopolist’s Demand Curve
Third Elasticity Relation
1PMCP
1
P
MCP
The Monopolist’s Demand Curve
Third Elasticity Relation
1
P
MCP
The Monopolist’s Demand Curve
A Summary
11PMR
11
MCP
1
P
MCP
The Monopolist’s Demand Curve
End
©2004 Charles W. Upton