ECON 103 Lecture Notes - Lecture 10: Price Discrimination, Reservation Price, Market Power
12 May 2016
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Document Summary
A firm has market power if it can influence the market price. If you came to sfu, 20 years ago you would find nothing. They had a gas station, they had simon cs and they had ravens cafeteria and the. Renaissance was the only decent seller of coffee. However, today there are other good places on campus. 20 cents cheaper, and there is a place downhill where will you go probably to renaissance. This is because it is too costly to go downhill will probably take you an hour. Differences in product: horizontal differentiation: two people sell coffee, but there is no difference in the product. If a firm is a monopoly, that means it is the only firm which operates. Some monopolies are natural monopolies the market is such that one firm could make a positive profit; however, if there are two firms, you would have negative profit. When there"s a monopoly, there"s dwl and no supply curve.
