Since in equilibrium under price discrimination mr a mr b from i and if we get suppose absolute value of price elasticity in market a is equal to 2 and in market b it is equal to 3 then thus when elasticities in markets a and b are 2 and 3 respectively the prices in the two markets will be in the ratio of 4. It is more usual however to find that a monopolist sells identical products to different.
The equilibrium output of the discriminating monopoly is given by the intersection of the mc and the demand curves.
Price discriminating monopoly at equilibrium graph. In a competitive market the price would be lower and more consumers would benefit. Such a situation is described as perfectly discriminating monopoly. It can be seen that the equilibrium output of discriminating monopoly is more than under pure monopoly q m.
Discriminating monopoly or price discrimination occurs when a monop olist charges the same buyer different prices for the different units of a commodity even though these units are in fact homogeneous. A monopoly is allocatively inefficient because in monopoly the price is greater than mc. This is shown to be equal to q c in fig.
Take this short test on the basics of the monopoly market structure equilibrium position in the monopoly market and price discrimination. A monopoly is productively inefficient because it is not the lowest point on the ac curve. Take this 7 minute short test and revise concepts like degrees of monopoly price discrimination equilibrium price and output for the monopolist long run and short run equilibrium.
This eliminates consumer surplus and turns that into revenue which in turn increases the economic profits that are earned by the firm. A pure monopoly charges a single price where a price discriminator will charge each consumer at different prices. By price discriminating a monopolistic firm will increase its economic profits.
0 comments:
Post a Comment