1MR
additional revenue from selling one more unit
MR = price for price taking businesses perfect comp
MR<price for price making businesses inother market structures
2MC
cost of producing one more additional unit of output
operating near capacity = increasig M
not operating near capacity = constant MC
3profits with MR and MC
increasing quantity gives profits when MR>MC
stop increasing quantity when MR<NC
Pmax = MC = MR
4government policies for natural monopoly
public ownership
regulation
5solutions to natural monopoly
crown corporations (TTC)
Rate of return regulation - setting price so the monopoly is only just covering average total cost and normal profit
6nash equillibrium
confess-confess
this is the same as cheat cheat on any agreements of collusion
7game theory
mathematical tool for understanding how players make decisions, taking into account what they expect their rivals to do
8modern competition act 1986
criminal offences:
-price fixing
-bid rigging
-false/misleading advertising
civil offences:
-mergers - punished by fines and legal prohibitions
9tragedy of commons
the oversuse and depletion of a resource that no one can be excluded from because of missing property rights
10efficient pollution
balances the additional enviornmental benefits of lower pollution with the additional opportunity costs of reduced living standards
the socially desirable amount of pollution is not zero because the opportunity costs of reducing pollution will be greater than the additional benefits gained of lower pollution
11when there are externalities smart choice is output where
MSC = MSB
12input markets
households are sellers and businesses are buyers
13income wealth
income - a flow
wealth - a stock