TOPICS
- Long Run
Equilibrium
- Monopolies and Efficiency (Inefficient)
- Price Discrimination
- Natural Monopolies and Regulation
OUTCOMES
Discuss the economic
effects of pure monopoly on price, quantity produced,
allocative efficiency, productive efficiency, dynamic
efficiency (technological progress), X-efficiency, and
distribution of income (equity).
Understand the adjustment process
from the short run to the long run and the role of
barriers to entry. Why does a
monopoly earn economic profits in the long
run?
Draw the long run equilibrium
graph for a pure monopoly and indicate the profit
maximizing quantity, the allocatively efficient quantity,
and the productively efficient quantity.
Define price discrimination, list
three conditions necessary for price discrimination,
explain how price discrimination affects allocative
efficiency, explain why profits and output will be higher
for a discriminating monopoly.
Identify two pricing strategies of
monopoly regulation and explain the dilemma the
regulators face in utilizing these strategies
Explain why a regulated monopoly
may not have an incentive to reduce costs.
Why does the Illinois
government allow ComEd to have a monopoly on the
distribution of electricity in northern
Illinois?
|
