ECON254 Lecture Notes - Lecture 1: Market Power, Takers, Perfect Competition
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9 Sep 2016
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Refers to the study of markets in absence of perfect competition. Both firms and buyers as price takers: lots of firms produce the same good, lots of buyers out there, if one firm increase their price, then buyer will not buy, there will eventually be an equilibrium. If a firm can raise its price and not lose all its customers, then that firm has some degree of monopoly power: not a pure price taker, the firm can set a price. Profit ( ) = total revenue (tr) total costs (tc) Once the firm decides how much quantity they want to sell, they can determine the profit. What is the product: merchandise, tv programming, tickets to see the game. Who is the firm: sometimes the league, sometimes the individual team depending on the product, in this class: the firm is the team.
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