ECON 102 Midterm: EconExam3StudyGuide.docx
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ECON 102 Full Course Notes
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Monopoly: a profit maximizing monopolist will produce a level of output where p>mr=mc, p>mc, produces too little. Lerner"s index: (p-mc)/p = 1/|e| *what really is the lerner"s index, consumer surplus (monopoly+pc): the difference between what a consumer is willing to pay for a good and what they actually have to pay(price). One shot game: dominate strategy: a strategy that always yields a higher payoff than any other strategy, regardless of the strategies chosen by the other players. In the long run equilibrium, atc is not minimized in a monopolistic competitive industry. Price discrimination: occurs when a firm changes different prices to different consumers of the same product. Necessary conditions for price discrimination: the firm must face a downward sloping demand curve, firm must be able to distinguish between two or more groups of consumers that have different price elasticity of demands. The consumers with the more elastic demand are charged with a lower price.
