Goals
• User Friendy Approach - MP3 player plus another application where work is done. • Rely on Application - Not Web page nor PowerPoint. In this case Excel is used. Experiment with content - what if? • Elegance in Design - Getting the students to "see" the essence of the subject.
layer plus s done.
page nor used. ?
e students to
Choke Price A= Demand Curve 0 37.5 $75
Monopolist's Revenue Maxim
$100
$75 $0
Price Monopolist Charges P= $37.50 Quantity Demanded at Price P Q= 18.75 0 18.75 18.75 18.75 $37.50 $37.50 $37.50 0
25 Revenue Generated $703.13 Revenue Maximum!
$75
Price
$37.50
$0
0
Double Click on Word Icon For Notes
18.75
Buzzwords Scarcity - limited availability of resource or good Constraint - embodiment of scarcity in an economics prob Choke Price - price above which demand is zero Parameter - a numerical way to characterize the environm Revenue - what the monopolist receives for selling the goo Rational Behavior - behavior driven by the need to optimiz the contraint(s)
Monopolist's Revenue Maximum Problem
Demand Curve
Price Monopolist Charges Quantity Demanded
18.75
50
Quantity
lability of resource or good ment of scarcity in an economics problem bove which demand is zero cal way to characterize the environment monopolist receives for selling the good ehavior driven by the need to optimize (in this case revenue) given
Choke Price A= $75
Comparative Statics of Monopo
50 Original Demand Curve 0 $75 18.75 $0
Slope of (Inverse) Demand B= -$4.00 New Demand Curve 0 $75 18.75 $0 Price Monopolist Charges P= $37.50 Quantity Demanded at Price P (New Demand) Q= 9.38 0 9.38 9.38 9.38 $37.50 $37.50 $37.50 0
$100
$75
Revenue Generated $351.56 Revenue Maximum!
Price
$37.50
25
$0
0
9.38
Double Click On Word Icon For Notes
Buzzwords Comparative Statics - how the optimal choice changes giv Prediction of Behavior - based on a comparative statics an changes in some way how the choice will be expected to c
mparative Statics of Monopolist's Problem
Original Demand Curve New Demand Curve Price Monopolist Charges Quantity Demanded
50
Quantity
- how the optimal choice changes given a change in the environment r - based on a comparative statics analysis, when the environment y how the choice will be expected to change as a consequence
Choke Price A= $75
Comparing Old to New D
50 Original Demand Curve 0 $75 18.75 $0
Slope of (Inverse) Demand B= -$4.00 New Demand Curve 0 $75 18.75 $0 Price Monopolist Charges P= $37.50 Quantity Demanded at Price P (New Demand) Q= 9.38 0 9.38 9.38 9.38 $37.50 $37.50 $37.50 0
$100
$75
Revenue Generated $351.56 Revenue Maximum!
Price
$37.50
25
Original Optimum 9.375 $37.50
$0
0
9.38
Double Click On Word Icon For Notes
Buzzwords Welfare - comparing satisfaction (revenue) between origin Revealed Preference - basing the welfare comparison on Paradigm - a way of thing about doing things
Comparing Old to New Demand
Original Demand Curve Original Optimum New Demand Curve
Price Monopolist Charges
Quantity Demanded
50
Quantity
satisfaction (revenue) between original environment and new environment - basing the welfare comparison on the original choice hing about doing things