Download Lecture 28: Monopoly and Monopsony

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Transcript 
Microeconomics
Corso E
John Hey
Chapter 28
• Monopoly
• A single seller in a market ...
...can choose the price (and the quantity)
• but must take into consideration the demand for
the good.
• Monopsony
• A single seller in a market ...
..can choose the price (and the quantity)
• but must take into consideration the supply of
the good .
Remember Chapter 13?
Monopoly
• A single seller in a market.
• Suppose that the demand curve for the
good is given by:
• p = α – β y (i.e. is linear)
• Total Revenue R = py = αy – β y2
• Is a concave quadratic function.
• Marginal Revenue = dR/dy = α – 2β y
• The slope of the marginal revenue curve is
twice the slope of the demand curve.
Monopsony
• A single seller in a market (for example, a
labour market).
• Suppose that the supply curve in the
market is (drop the subscript):
• w=γ+δq
(i.e. is linear)
• Total Cost C = F + wq = F + γq + δ q2
• Marginal Cost = dC/dq = γ + 2δ q
• The slope of the Marginal Cost curve is
twice the slope of the supply curve.
Minimum Wage Legislation
Chapter 28
• Goodbye!
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