Econ 150 Microeconomics Figure 10.11 “perfect competition, monopoly, and efficiency” shows that the monopolist charges price p m rather than the competitive price p c; the higher price charged by the monopoly firm reduces consumer surplus. consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay. it is. Consumer surplus is the difference between the price that consumers pay and the price that they are willing to pay. on a supply and demand curve, it is the area between the equilibrium price and the demand curve. for example, if you would pay 76p for a cup of tea, but can buy it for 50p – your consumer surplus is 26p.
Monopoly In this video we learn how to calculate consumer surplus just by looking at a monopoly graph! if you enjoyed the video, consider leaving a like and sharing w. In that case, consumer surplus is area cs. when price drops to p 1, quantity sold increases. on the one hand, there is an increase on the consumer surplus of initial consumers, being this equal to area cs’. on the other hand, new consumers are willing to buy, being their consumer surplus ncs. producer surplus:. Market surplus = $4.2 billion monopoly market. in comparison, the monopoly market has p e = $140 and q e = 30 million. figure 8.1h. calculating market surplus: consumer surplus = $900 million. blue shaded region. [($200 $140)*(30)] 2 = 900 million. notice consumer surplus decreased for two reasons. – in a monopoly, consumer surplus is always lower (relative to perfect competition). – but it could be that the increase in the firm’s profit more than o↵sets the decrease in consumer surplus. lower! illustrate graphically. (example with linear demand and marginal cost func tions.) under monopoly pricing: – the firm sets p.
B Producer Surplus Under Monopoly Is Larger By How Much Market surplus = $4.2 billion monopoly market. in comparison, the monopoly market has p e = $140 and q e = 30 million. figure 8.1h. calculating market surplus: consumer surplus = $900 million. blue shaded region. [($200 $140)*(30)] 2 = 900 million. notice consumer surplus decreased for two reasons. – in a monopoly, consumer surplus is always lower (relative to perfect competition). – but it could be that the increase in the firm’s profit more than o↵sets the decrease in consumer surplus. lower! illustrate graphically. (example with linear demand and marginal cost func tions.) under monopoly pricing: – the firm sets p. Consumer surplus equals the area of the under the demand curve and monopoly price (p m), horizontal line. coordinates of three corners of this triangle will be: top left: (0, demand curve intercept) = (0, 140). Monopoly graph. a monopolist will seek to maximise profits by setting output where mr = mc. this will be at output qm and price pm. compared to a competitive market, the monopolist increases price and reduces output. red area = supernormal profit (ar ac) * q. blue area = deadweight welfare loss (combined loss of producer and consumer surplus.
Comments are closed.