English Subtitles for Micro Unit 4 Summary (Complete)- Imperfect Competition

Subtitles / Closed Captions - English

hey econ students this<font color="#E5E5E5"> is Jacob Clifford</font>

welcome to AC DC economics and microeconomics unit for imperfect competition this video is only for people who<font color="#E5E5E5"> purchase the ultimate review</font> packet so thank you so much for <font color="#E5E5E5">supporting ACDC econ as a favor to me</font>

please don't give away<font color="#E5E5E5"> my stuff for free</font> your payment allows me to continue make awesome resources help more students learn economics in the last video we talked about<font color="#E5E5E5"> perfect competition so in</font> this<font color="#E5E5E5"> video we're gonna talk about</font>

imperfect competition it's<font color="#E5E5E5"> gonna</font><font color="#CCCCCC"> start</font> <font color="#CCCCCC">off by talking about monopolies at the</font> graph looks like consumer and producer surplus then<font color="#E5E5E5"> I'll talk</font><font color="#CCCCCC"> about</font><font color="#E5E5E5"> the idea</font><font color="#CCCCCC"> of</font> regulating monopoly so there's socially optimal and fair return while the

<font color="#CCCCCC">government might get involved in natural</font> monopolies then I'll talk<font color="#CCCCCC"> about</font><font color="#E5E5E5"> price</font> discrimination then I'll jump into monopolistic competition and finally end off with oligopolies and game theory now I<font color="#CCCCCC"> want you</font><font color="#E5E5E5"> to</font><font color="#CCCCCC"> remember that</font><font color="#E5E5E5"> these</font>

summary videos are designed to be going quick I'm trying to help you review for an exam or prepare for<font color="#E5E5E5"> the AP test so</font> I'm going pretty fast so stay on<font color="#E5E5E5"> board</font> here we go to start things off let's<font color="#E5E5E5"> go</font> back and<font color="#E5E5E5"> talk about the</font><font color="#CCCCCC"> for market</font>

structures remember there's perfect competition but not less competition oligopoly<font color="#CCCCCC"> and monopoly not in the last</font> you know we<font color="#CCCCCC"> talked about perfect</font> <font color="#E5E5E5">competition so now we're</font><font color="#CCCCCC"> talked</font><font color="#E5E5E5"> about</font> the other three we're<font color="#CCCCCC"> gonna start off I</font>

<font color="#CCCCCC">talked about monopolies you already</font> understand the idea of monopoly but you probably don't already know the graph and the concepts will go with it so a monopoly is when one firm controls the market the firm is<font color="#CCCCCC"> the market now keep</font>

<font color="#E5E5E5">in</font><font color="#CCCCCC"> mind this might because they have a</font> patent or because everyone's using that product or because they're the only producer in town or the only producer in the world but<font color="#E5E5E5"> for some reason there's</font> very high barriers and other firms

cannot enter next there's a unique <font color="#E5E5E5">product that product it has no close</font> substitutes that people are<font color="#CCCCCC"> actually</font> buying we already<font color="#CCCCCC"> said high barriers so</font> firms can enter and their price makers now this is different<font color="#E5E5E5"> than perfect</font>

competition last<font color="#E5E5E5"> time we learn about</font> perfect<font color="#E5E5E5"> competition the price is set by</font> the market and you can't raise or lower your price it's<font color="#E5E5E5"> not like that for</font> monopolies knowledge a pleasing<font color="#E5E5E5"> ops</font> competition in this situation there are

price makers they can charge any price they want that's<font color="#E5E5E5"> going to lead</font><font color="#CCCCCC"> us into</font> probably the most important concept to understanding what the grass look like in<font color="#E5E5E5"> this unit if the</font><font color="#CCCCCC"> idea that the man</font> doesn't equal the marginal revenue yeah

in the last year remember there was a horizontal demand curve which equaled the marginal revenue it was<font color="#E5E5E5"> mr.</font><font color="#CCCCCC"> darp but</font> that's not going to happen in<font color="#E5E5E5"> the</font> situation and last to detention it'll make sense<font color="#E5E5E5"> let's use the ultimate review</font>

packet as an example right<font color="#CCCCCC"> iowa price</font> maker there's no perfect competition when it comes to producing economics package but<font color="#E5E5E5"> there's not millions of</font> firms all producing the same<font color="#E5E5E5"> exact stuff</font> mine is unique it's slightly differ

than any other review packet that's<font color="#E5E5E5"> out</font> there and my video is unique as well the point<font color="#E5E5E5"> is I'm a price maker so here's the</font> price the<font color="#CCCCCC"> quantum and</font><font color="#E5E5E5"> the toll revenue</font> and the marginal revenue for my company for each given day if<font color="#E5E5E5"> I decide to sell</font>

the packets for 14 bucks let's assume no one's going to buy<font color="#E5E5E5"> it the price is just</font> <font color="#E5E5E5">way too high no one buys it for 14 so my</font> quantity is 0 and i get no total revenue if I lower my price then more people will buy so if I lower the price down<font color="#E5E5E5"> to</font>

12 let's say one person buys so I sell for twelve dollars 1 times 12 is my toll revenue so notice my total revenue goes from 0 to 12 so my additional or marginal revenue is 12 now you<font color="#E5E5E5"> might be</font> think of the of course you sold another

unit for twelve dollars and so you make twelve dollars additional revenue yeah makes sense well what's this I want<font color="#CCCCCC"> to</font> sell another unit what do I got to do I <font color="#E5E5E5">think I can't just sell another unit</font> because no one<font color="#E5E5E5"> else is going to buy it</font>

at<font color="#E5E5E5"> $12 I got a low the price so to sell</font> another unit I<font color="#CCCCCC"> gotta lower</font><font color="#E5E5E5"> the price</font> let's say down to ten dollars at ten dollars to people buy it per day 2 times 10 is 20<font color="#E5E5E5"> that's my total revenue notice</font> my additional revenue i went from 12 to

20 right my total revenue it from 12 20 so my additional revenue is<font color="#CCCCCC"> 8 now think</font> about that's kind of weird<font color="#E5E5E5"> I sold</font> another unit for<font color="#E5E5E5"> 10 bucks but my</font> additional revenue is less than when i sold it for it's only<font color="#E5E5E5"> eight I lost two</font>

dollars somewhere well where did I lose the two dollars I lost<font color="#E5E5E5"> a two dollars on</font> <font color="#CCCCCC">the revenue I could have earned by</font> selling it for twelve dollars right when I lower it down to<font color="#E5E5E5"> 10 that's great i get</font> another customer but I lose the revenue

on<font color="#CCCCCC"> the person I could</font><font color="#E5E5E5"> have sold it</font><font color="#CCCCCC"> to</font> for a higher price and let's do it again let's say<font color="#CCCCCC"> hello the price down to eight</font> at 83 people<font color="#CCCCCC"> buy so</font><font color="#E5E5E5"> the total revenues</font> 24 so my additional revenue is for notice i sold another unit freight but i

only made an additional four dollars my marginal revenue does not equal<font color="#E5E5E5"> the</font> price it doesn't equal to demand now if <font color="#E5E5E5">i keep lowering my price notice what</font> happens if I low my price down to<font color="#E5E5E5"> six</font> dollars per packet then four people will

<font color="#E5E5E5">buy</font><font color="#CCCCCC"> six times 4 is 24 look my total</font> revenue doesn't change at all in fact I get no additional revenue my margin revenue<font color="#E5E5E5"> zero from selling the next unit</font> <font color="#E5E5E5">my margin of is actually negative I'm</font> actually making less additional money by

lowering<font color="#CCCCCC"> the price now</font><font color="#E5E5E5"> again this seems</font> counterintuitive it seems like if I just sell more units I can just make more money but<font color="#E5E5E5"> it doesn't</font><font color="#CCCCCC"> work that</font><font color="#E5E5E5"> way</font> because I'm losing<font color="#E5E5E5"> money on previous</font> units I could have sold for a higher

price it<font color="#E5E5E5"> actually creates a graph it's</font> right<font color="#E5E5E5"> here</font> and curve is downward sloping just like a normal market curve showing the law to man with<font color="#E5E5E5"> the price is high few people</font> want to buy prices<font color="#E5E5E5"> low more people want</font>

to buy now the marginal revenue doesn't equal<font color="#E5E5E5"> that demand curve in fact the</font> marginal revenue if we plotted those numbers I<font color="#CCCCCC"> just showed you it would look</font> like<font color="#E5E5E5"> this right its downward sloping and</font> it's less<font color="#CCCCCC"> than the demand and that's why</font>

teachers talk about the monopoly gang sign boom looks like this you got<font color="#CCCCCC"> to man</font> you got marginal revenue so when you draw the graph you're figuring out on a test boom<font color="#E5E5E5"> I am a marginal revenue well</font> it's important understand what it looks

like but it's also<font color="#E5E5E5"> important understand</font> why it looks that<font color="#E5E5E5"> way so the demands</font> downward sloping because the law demand and the marginal revenue is less than <font color="#E5E5E5">the demand curve for all price makers</font> because to sell another unit they got a

lower the price of all units including the ones that could have sold for a higher price I've repeated that three times you know it<font color="#E5E5E5"> must be important ok</font> back to the grass now what would total revenue look like like total revenue we

know goes up then eventually it hit a peak right on our chart I showed you earlier in a peak and they went back down so the total revenue goes up hits a peak right here and then goes right back down again notice<font color="#E5E5E5"> that when marginal</font>

revenue hits zero the total revenue<font color="#CCCCCC"> is</font> at its maximum satis beat now it helps you understand<font color="#E5E5E5"> the idea if you know</font> calculus<font color="#E5E5E5"> the marginal revenue is the</font> derivative of<font color="#E5E5E5"> the total revenue curve</font> right<font color="#CCCCCC"> and so notice that whenever the</font>

marginal is falling when that marginal curve is going down then the total revenue curve is going up but by less and less and when<font color="#E5E5E5"> the marginal revenue</font> hits 0 then the toll revenue hits a peak and of course when the marginal revenue

is negative<font color="#CCCCCC"> if</font><font color="#E5E5E5"> I sell another unit but I</font> get less additional revenue than my total revenues gonna fall so it makes sense the grass another thing your teacher might show<font color="#E5E5E5"> you here is the idea</font> of<font color="#E5E5E5"> the elastic and inelastic range of</font>

<font color="#E5E5E5">that demand curve now you already know</font> this<font color="#E5E5E5"> because we learn the concept back</font> in unit<font color="#E5E5E5"> 2 it's called a total revenue</font> test let me show you first where they are this right here on<font color="#CCCCCC"> this side is the</font> elastic range of<font color="#E5E5E5"> that demand curve and</font>

<font color="#E5E5E5">then on the other side that's the</font> <font color="#E5E5E5">inelastic range how you know is because</font> when<font color="#CCCCCC"> mr hits zero that separates the two</font> now the<font color="#E5E5E5"> reason is</font><font color="#CCCCCC"> because something you</font> learn backing unit to the<font color="#CCCCCC"> total revenue</font> test when the price is going down and

the total<font color="#E5E5E5"> revenue</font><font color="#CCCCCC"> is going up that means</font> <font color="#CCCCCC">it's elastic</font><font color="#E5E5E5"> notice when the price is</font> falling<font color="#E5E5E5"> the toll revenues going up on</font> the<font color="#CCCCCC"> left-hand side on the other</font><font color="#E5E5E5"> side as</font> the price is going down the toll revenue is going<font color="#E5E5E5"> down and that's the idea of</font>

inelastic demand it's alphabetical that might help you remember<font color="#CCCCCC"> e I</font> <font color="#CCCCCC">plastic</font><font color="#E5E5E5"> and inelastic</font><font color="#CCCCCC"> raised the demand</font> curves now<font color="#CCCCCC"> they know the gang sign no</font> just take that and<font color="#CCCCCC"> put it</font><font color="#E5E5E5"> together with</font> cost curves that you learned back in the

last summer video<font color="#E5E5E5"> s'ok</font><font color="#CCCCCC"> Oscars marginal</font> <font color="#E5E5E5">cost and ATC we take that we put them on</font> <font color="#E5E5E5">this graph we got demand marginal</font> revenue marginal cost and ATC that is a monopoly graph at first<font color="#E5E5E5"> glance</font><font color="#CCCCCC"> it looks</font> super confusing but it's actually<font color="#E5E5E5"> super</font>

easy because you already<font color="#E5E5E5"> learn all the</font> key concepts for example first question how much output should this monopoly produce well you already<font color="#E5E5E5"> know the rule</font> <font color="#CCCCCC">and it's the</font><font color="#E5E5E5"> most important equation in</font> all of microeconomics you always produce

where Mr equals MC so in this situation they should produce six units again the reason why is because only six units will maximize their profit it's not going to maximize your total revenue their total revenue gets maximized or

the mr hits zero which<font color="#CCCCCC"> is a completely</font> different concept now you know they should produce six units what price should they charge well you might say five right dot dot over at five nope a monopoly is<font color="#CCCCCC"> gonna charge up to</font><font color="#E5E5E5"> what</font>

people are willing to pay so for six units the demand curve says people are willing to pay seven dollars so you go up and over that is the price and quantity for monopoly now I have<font color="#CCCCCC"> a few</font> more questions for<font color="#E5E5E5"> you posit video see</font>

how you do it's the same<font color="#CCCCCC"> thing as the</font> last summary video what's the total revenue the total cost the profit or the loss for this monopoly<font color="#E5E5E5"> alright then</font> pause video I'll go over<font color="#E5E5E5"> the total</font> <font color="#CCCCCC">revenue is</font><font color="#E5E5E5"> the price times the quantity</font>

we already figured that out the price is seven the quantity of six or seven times six is this box<font color="#E5E5E5"> right here $42 of total</font> revenue this can be like 42 million or 42,000 just keep it simple and say 42 and then the total cost will you just go

up<font color="#CCCCCC"> to the</font><font color="#E5E5E5"> ATC not where Mr equals MC but</font> up to the ATC which is six 6 times 6 is 36 right when you subtract it out<font color="#E5E5E5"> for t2</font> <font color="#E5E5E5">minus 36 gives you the six dollars</font> profit right there now you should<font color="#CCCCCC"> also</font> <font color="#E5E5E5">be able to spot the profit per unit</font>

<font color="#E5E5E5">whether it's how much profit and making</font> them each one unit they're selling well they're selling each unit 47 average total cost of six they're making a dollar per unit let's practice that again except this time with a loss we've

got the ATC that's up super high right here in this situation<font color="#CCCCCC"> mr hits MC at 10</font> and<font color="#E5E5E5"> they're going to charge in this case</font> nine dollars<font color="#E5E5E5"> as the price next question</font> is<font color="#E5E5E5"> this should this firm shut down</font> remember that shut down roll when price

falls below that<font color="#E5E5E5"> ABC right the purple</font> line when price falls below that<font color="#CCCCCC"> should</font> shut down now as a price below ABC<font color="#E5E5E5"> no</font> right the price is above ABC it's nine and then maybe<font color="#E5E5E5"> c is obviously less than</font> that

this firm should produce in the short run even though they're making a loss hopefully the price will go up and more people<font color="#E5E5E5"> will buy but whatever reason they</font> should continue to<font color="#E5E5E5"> produce because if</font> they shut<font color="#CCCCCC"> down then they'd have to pay</font>

all their fixed<font color="#E5E5E5"> costs which is bigger</font> than<font color="#CCCCCC"> their</font><font color="#E5E5E5"> lost</font><font color="#CCCCCC"> their making so practice</font> time what's the total revenue total<font color="#CCCCCC"> cost</font> and<font color="#CCCCCC"> the loss on this graph all right</font> pause it then I'll go over<font color="#CCCCCC"> it alright</font> revenue is<font color="#CCCCCC"> 9 times 10 so it's right</font>

there ninety dollars the total cost is <font color="#CCCCCC">ten up</font><font color="#E5E5E5"> to the ATC not the ADC the ATC so</font> 10 times 10 is 100<font color="#E5E5E5"> and so the ninety</font> dollars minus 100 gives you negative ten dollars in<font color="#E5E5E5"> the case a loss of ten</font> dollars the box right there now next

question what's the loss per unit well in this case<font color="#CCCCCC"> it's a dollar loss per unit</font> right they're selling it for nine but it <font color="#CCCCCC">costs</font><font color="#E5E5E5"> them</font><font color="#CCCCCC"> ten you're losing a doll on</font> <font color="#CCCCCC">each you that they're selling now if</font> <font color="#E5E5E5">you're not pausing these videos and</font>

you're<font color="#E5E5E5"> really not getting it because</font> when I go to<font color="#E5E5E5"> the answer I go yeah I see</font> it but<font color="#CCCCCC"> you got to do it</font><font color="#E5E5E5"> for yourself so</font> you're on<font color="#E5E5E5"> this one completely on your</font> own you got four questions find the total revenue the total cost the profit

or loss in this<font color="#E5E5E5"> case the profit or loss</font> per unit write down your answers pause the video try your best and then start the video back up all<font color="#E5E5E5"> right ready and go</font> seriously you should be pausing this video<font color="#E5E5E5"> okay first what output</font><font color="#CCCCCC"> should they</font>

produce well you produce what<font color="#E5E5E5"> Mr equals</font> MC which in this case is<font color="#CCCCCC"> five units so</font> five units what price they charge six right no remember<font color="#E5E5E5"> you charge up</font><font color="#CCCCCC"> to the</font> demand curve so the price is<font color="#CCCCCC"> 10 10 times</font> 5 gives you the total revenue of 50 the

total cost of<font color="#E5E5E5"> five units you got to go</font> up to the<font color="#CCCCCC"> average total cost so 5 times</font> 5 is 25 so<font color="#E5E5E5"> that's that box right there</font> is the total cost now 50 minus 25 gives you the<font color="#E5E5E5"> Prophet it's this box obviously</font> not to scale it's $25 profit and they

are making five dollars profit per unit did you get it does it make<font color="#CCCCCC"> sense let me</font> ask<font color="#E5E5E5"> you a different question if they're</font> making profit what are other firms going to do right well other firms going to do if this monopoly is making profit

nothing you remember this is a monopoly firms can't enter the<font color="#E5E5E5"> market number</font> there's very high barriers because there's high<font color="#CCCCCC"> cost of production or</font> because there's a patent something preventing other firms from entering if

they're making profit it's gonna stay that way in<font color="#CCCCCC"> the long run this</font><font color="#E5E5E5"> is</font> <font color="#E5E5E5">actually super important remember back</font> in<font color="#E5E5E5"> the last unit and perfect competition</font> when profit was made other firms entered and the graph all went back long run in

this situation this is a monopoly graph in the short run and the long run cuts the same<font color="#CCCCCC"> and</font><font color="#E5E5E5"> it's the market as the firm</font> there's no side by side grass here this is the graph for monopoly now you might see<font color="#E5E5E5"> a monopoly graph looks</font>

slightly different it might look like this but the same rules<font color="#E5E5E5"> that before just</font> follow the same rules same<font color="#E5E5E5"> question what</font> the<font color="#E5E5E5"> total revenue total cost profit the</font> profit or loss per unit first produce where Mr equals MC in this situation

that is<font color="#CCCCCC"> 6 we're charging a price up</font> demand curve which is<font color="#CCCCCC"> 9 so</font><font color="#E5E5E5"> that box</font> right there is 50 49 times<font color="#CCCCCC"> 6 total</font> revenue the total cost you go up<font color="#E5E5E5"> to the</font> ATC which is six in this<font color="#E5E5E5"> case</font><font color="#CCCCCC"> 6 times 6</font> is<font color="#CCCCCC"> 36</font><font color="#E5E5E5"> dollars that's the total cost and</font>

you subtract those out you find out the profit is 18 right profit per unit is 9-6 because you're selling them<font color="#CCCCCC"> for nine</font> dollars it cost you six dollars to produce each unit that three dollars profit per unit is a profit per unit but

if you multiply<font color="#CCCCCC"> that times</font><font color="#E5E5E5"> six that</font> gives you the 18 right so you can find the profit per unit two different ways you can divide the profit by the quantity or you can just look at<font color="#E5E5E5"> the</font> difference from the price<font color="#E5E5E5"> and the ATC</font>

now let's talk about efficiency and monopolies first monopolies unlike perfect competition are inefficient right<font color="#E5E5E5"> because they charge too high of a</font> price they produce too little quantity in their costs or too high so they're

not productive or allocated<font color="#E5E5E5"> Lee</font> efficient now I want<font color="#CCCCCC"> to show it to</font><font color="#E5E5E5"> you</font> on the graph take a look here's<font color="#E5E5E5"> the</font> demand and here's<font color="#E5E5E5"> the supply for a</font> perfectly competitive market right the one we<font color="#E5E5E5"> learn back in the last unit we've</font>

got demand supply where's consumer surplus well remember it's right here it's the difference between what people in de panne what they did pay and right <font color="#CCCCCC">here is the producer surplus now I want</font> <font color="#CCCCCC">you to take a mental picture in your</font>

mind that's what it<font color="#E5E5E5"> looks like okay</font> we're gonna show it looks like for monopoly so PPC stands for price perfect competition QP c stands for the quantity of perfect competition now here comes a monopoly<font color="#E5E5E5"> it looks like this when you add</font>

in that marginal revenue right<font color="#E5E5E5"> below the</font> demand curve a monopoly produces we're at my equals MC which is right here charging a price up to demand so<font color="#E5E5E5"> 4pm and</font> QM it shows you the price and quantity for monopoly just by looking at the

graph you can tell it's going on<font color="#E5E5E5"> the</font> price for monopoly is higher and the quantity is less right monopolies charge higher price and produce less output also<font color="#CCCCCC"> they cause consumer surplus to get</font> <font color="#E5E5E5">smaller right consumer surplus for a</font>

monopoly would be right there producer surplus would be right<font color="#CCCCCC"> here even though</font> monopolies don't<font color="#E5E5E5"> only have supply curves</font> but whatever and here is dead weight loss remember that's because we're not <font color="#E5E5E5">producing the quantity that society</font>

actually<font color="#E5E5E5"> wants so right here</font><font color="#CCCCCC"> this</font> quantity<font color="#E5E5E5"> PC that's the socially optimal</font> quanta it would<font color="#E5E5E5"> happen in perfect competition</font> and since we're producing less than that we're obviously having some sort of

inefficiency in this market students have<font color="#E5E5E5"> a tendency</font><font color="#CCCCCC"> to get confusing the</font> <font color="#CCCCCC">goal</font><font color="#E5E5E5"> in efficiency</font><font color="#CCCCCC"> route a monopoly ever</font> be inefficient remember there being inefficient based on society's needs society wants more output they're being

efficient for themselves right for making profit they're maximizing profit that's what they care<font color="#CCCCCC"> about I want</font><font color="#E5E5E5"> to</font> maximize<font color="#CCCCCC"> profit it doesn't matter if I'm</font> causing deadweight loss again<font color="#CCCCCC"> remember</font> the idea of allocated and productive

efficiency a monopoly is not allocated <font color="#E5E5E5">ly efficient because they're not</font> producing with a price equals the marginal cost<font color="#E5E5E5"> in fact the price is</font> greater than<font color="#E5E5E5"> the marginal cost because</font> they're maximizing profit right here so

the result is<font color="#E5E5E5"> are causing dead weight</font> loss and they're not making them out society wants they're also not productively efficient notice they're not producing at the minimum<font color="#CCCCCC"> atc so</font> <font color="#E5E5E5">their average of the costs are higher</font>

now you<font color="#E5E5E5"> wanted why would</font><font color="#CCCCCC"> a firm ever</font> produced if their costs are higher well again they're trying<font color="#E5E5E5"> to maximize profit</font> maximizing profits more important than getting<font color="#E5E5E5"> costs as low as possible or</font> producing what society actually<font color="#E5E5E5"> wants</font>

now here's a good question for<font color="#CCCCCC"> you</font><font color="#E5E5E5"> are</font> <font color="#CCCCCC">all monopolies bad the answer is no</font> there's some monopolies that are great in fact<font color="#E5E5E5"> we want only one fired upon only</font> <font color="#E5E5E5">one electric company and that's</font> perfectly fine it's called a natural

monopoly a natural monopoly<font color="#E5E5E5"> is when it's</font> natural and<font color="#CCCCCC"> good to have only one firm</font> producing something because they can <font color="#E5E5E5">produce to the lowest cost again a great</font> example is the idea of<font color="#E5E5E5"> the electric</font> company if you<font color="#CCCCCC"> had a bunch of competing</font>

electric companies that<font color="#E5E5E5"> would be bad</font> because they'd all have higher<font color="#E5E5E5"> costs and</font> there's one<font color="#E5E5E5"> electric company that can</font> drive those costs really low because of economies of scale never economies of scale is getting bigger is cheaper

they're using mass-production techniques that smaller firms can't use the graph looks like this the way<font color="#E5E5E5"> I can spot it</font> really quick it looks the same but it's different<font color="#E5E5E5"> we still have demand in</font> marginal revenue now we have marginal

<font color="#CCCCCC">cost in atc but notice at where marginal</font> cost hits demand at the socially optimal or allocated<font color="#CCCCCC"> ly efficient quantity the</font> ATC is still falling right<font color="#E5E5E5"> right there</font> the ATC is still going<font color="#CCCCCC"> down at that</font> quantity socially optimal that means

<font color="#CCCCCC">it's natural to have only one firm</font> producing it because they can produce at <font color="#E5E5E5">the lowest cost but what if the electric</font> company maximizes profit as opposed to produce in the quantity socially optimal well that's when we talked about

regulating monopolies monopolies get regulated by the government usually because they<font color="#E5E5E5"> want to keep the prices</font> down or they want<font color="#E5E5E5"> to get</font><font color="#CCCCCC"> rid of dead</font> weight loss and there's going<font color="#E5E5E5"> to be two</font> different<font color="#E5E5E5"> ways we're going to talk about</font>

in this class we're gonna talk<font color="#CCCCCC"> about</font> socially optimal price and the fair return price socially optimal price is setting us price ceiling right where the price hits the marginal cost<font color="#E5E5E5"> so this</font> forces monopoly is produced in that

study actually want the other<font color="#E5E5E5"> one is</font> fair return fair return is making sure they're producing where they're making <font color="#E5E5E5">no economic profit they're actually</font> breaking even it'll make more sense on the graph take a look at the graph right

here is an unregulated market right this is where a monopoly would be unregulated they're producing where mi equals MC and they're charging the price up there at p.m. now the government came<font color="#CCCCCC"> in put it a</font> price ceiling a cap to<font color="#E5E5E5"> keep the prices</font>

from going out the<font color="#CCCCCC"> p.m. they put it</font> right here that's<font color="#E5E5E5"> called fair return</font> again the<font color="#CCCCCC"> reason why is because they're</font> breaking even the average total cost equals the price so they're not making any economic profit they're<font color="#E5E5E5"> making</font>

accounting profit I'm<font color="#E5E5E5"> not making up but</font> above money they<font color="#CCCCCC"> could be making</font> somewhere else now if but notice there's still give me some dead weight loss they're still not producing the quantity socially optimal to give<font color="#E5E5E5"> them producer</font>

<font color="#CCCCCC">corny socially optimal right they've got</font> a price even lower in this case right here<font color="#CCCCCC"> at PSO if we're the price sitting</font> right here that means the monopoly would produce the quantity socially optimal there would be no deadweight loss but

there's a problem<font color="#E5E5E5"> you see the</font><font color="#CCCCCC"> problem</font> yeah it would have a loss and you can't expect the electric company to run a loss right so in this situation if the government set a price cap at qso they get the quantity socially optimal but

they have to<font color="#E5E5E5"> give the electric company</font> some sort of subsidy to keep them in business now we're gonna switch gears here a little bit we're<font color="#E5E5E5"> going to talk</font> about price discrimination up to this point<font color="#E5E5E5"> I've been talked about monopolies</font>

that are not using price discrimination now let's<font color="#CCCCCC"> jump into</font><font color="#E5E5E5"> the idea it's</font> selling the same product to different consumers at different prices not to pull it off a couple things<font color="#CCCCCC"> to keep in</font> mind first they charge different<font color="#E5E5E5"> people</font>

different prices based on their willingness to pay people with an elastic demand are to be charged more than people who have just elastica man they pulled<font color="#E5E5E5"> out you have to have three</font> different things first you can't be a

price taker a price taker can't do price discrimination because everyone charged the<font color="#E5E5E5"> same price so it doesn't</font><font color="#CCCCCC"> work like</font> that you have<font color="#E5E5E5"> to be a price maker next</font> it's also important they have to be able <font color="#E5E5E5">to segregate the market they have to</font>

find<font color="#CCCCCC"> out who's willing</font><font color="#E5E5E5"> to pay more than</font> other people so again<font color="#CCCCCC"> for the airlines</font> the guy who has<font color="#CCCCCC"> to be in</font><font color="#E5E5E5"> Chicago</font> tomorrow he's willing<font color="#CCCCCC"> to pay more for</font> that flight then the family who<font color="#CCCCCC"> go into</font> Chicago would go visit<font color="#E5E5E5"> some relatives</font>

and they're buying three months in advance<font color="#E5E5E5"> so if you can find out</font><font color="#CCCCCC"> who those</font> people are and even figure it out then you can charge the people who want<font color="#E5E5E5"> the</font> <font color="#E5E5E5">most</font> price the last thing<font color="#E5E5E5"> there's an</font>

important one you<font color="#CCCCCC"> have to make sure</font> people can't resell the product to other people<font color="#CCCCCC"> so consumers must not be able</font><font color="#E5E5E5"> to</font> resell it because if they do that then it ruins the whole idea<font color="#E5E5E5"> and like</font> everything in this class there's a graph

that goes with it this graph right here is a regular monopoly the one that you're normally seeing that's not price discriminate<font color="#CCCCCC"> OOP that's what we got we</font> also<font color="#E5E5E5"> have a box of profit now keep in</font> mind<font color="#E5E5E5"> this is what the normal monopoly</font>

looks like here<font color="#CCCCCC"> comes a price to screw</font> in monopoly to sell another units right for a perfectly<font color="#E5E5E5"> priced discriminately</font> they don't have to lower the price the previous unit so if someone's want to pay a hundred dollars they'll charge

that person on<font color="#E5E5E5"> their dollars the person</font> who's going to pay<font color="#CCCCCC"> ninety they'll charge</font> <font color="#E5E5E5">them 90 persons want to pay 80 they'll</font> charge them 80 so a perfectly priced discriminately the demand equals the marginal revenue so that marginal

revenue would not be there it would be <font color="#E5E5E5">right there now at this point it all</font> becomes the same stuff where do they produce they produce where Mr hits MC so they can<font color="#CCCCCC"> proves that quantity which is</font> <font color="#E5E5E5">right there the quantity price</font>

discriminating now here's a couple <font color="#E5E5E5">questions where's the price where's the</font> profit and where's the consumer surplus for this a price discriminating monopoly first think about<font color="#E5E5E5"> the price you want to</font> go oh the prices over here dot that over

but no number they're charging different people different prices so you can't really<font color="#E5E5E5"> label the price it's for it's all</font> over the place so the<font color="#E5E5E5"> person who's</font> willing to pay a hundred bucks they<font color="#E5E5E5"> pay</font> <font color="#E5E5E5">down to dollars the person will play 90</font>

they<font color="#CCCCCC"> pay</font><font color="#E5E5E5"> 90 person who's 150</font><font color="#CCCCCC"> paid 50</font> person won't play 20 paid 20 right so <font color="#CCCCCC">all the way down or different prices</font> also the profit<font color="#E5E5E5"> we go it's a box</font> actually it's not right it's actually right here right remember<font color="#CCCCCC"> the person was</font>

going to pay 100 paid 100 and the average total cost is the cost and so <font color="#E5E5E5">that is the profit it's all the</font><font color="#CCCCCC"> way down</font> and so there's no consumer surplus in fact the consumer surplus has been <font color="#E5E5E5">converted in the profit so a price</font>

discriminating monopoly actually produces the quantity socially optimal notice they're producing the quantity or there's<font color="#E5E5E5"> no dead weight loss they're just</font> charging people higher prices and making a whole lot more profit now it's time<font color="#E5E5E5"> to</font>

practice take out<font color="#E5E5E5"> the ultimate review</font> packet go to the part talked about regulating monopolies so yet socially optimal if a return draw that out next dry price discriminate now keep in mind <font color="#E5E5E5">though most the time in your class</font>

you'll have a non-price discriminatory teacher will tell you very clearly when they want you to change it to<font color="#CCCCCC"> the demand</font> actually equals the marginal revenue most the time it's<font color="#CCCCCC"> going</font><font color="#E5E5E5"> look</font><font color="#CCCCCC"> like this</font> yeah

more practice to make sure you understand<font color="#E5E5E5"> a monopoly go ahead and click</font> right here it's an ultimate review practice video it's going<font color="#E5E5E5"> to give you a</font> monopoly graph your job is to<font color="#E5E5E5"> find all</font> the different concepts inside if<font color="#E5E5E5"> you can</font>

answer those questions you're<font color="#E5E5E5"> totally</font> getting it so that's it for monopolies let's talk about monopolistic competition now as<font color="#E5E5E5"> the name would</font> suggest it's like a monopoly but it's also like<font color="#E5E5E5"> competition you can see right</font>

here in the foreign market structures it's right<font color="#CCCCCC"> in the middle right so it's</font> kind of like competition<font color="#CCCCCC"> but it's kind</font> of like monopoly they're<font color="#E5E5E5"> definitely a</font> price maker but their firms can enter let's jump into it unlike a monopoly

monopolist competition has a large number of sellers so if you<font color="#CCCCCC"> think about</font> it fast<font color="#E5E5E5"> food restaurants is a great</font> <font color="#CCCCCC">example there's all these different</font> restaurants out there but they're selling a slightly different product so

that's what makes<font color="#E5E5E5"> it different than</font> perfect competition perfect competition has the same exact product the prices are set it's not like<font color="#CCCCCC"> that from monopoly</font> on petition slightly different product so they can charge different prices they

have some control the price it's easy for firms to enter and leave now this is important a monopoly very difficult firms cannot enter at all because there's high barriers now there's relatively low barriers I thought that's

going to change the<font color="#E5E5E5"> long-run graph then</font> the next thing<font color="#CCCCCC"> is there's a lot what's</font> called non-price competition in other words they try to advertise<font color="#E5E5E5"> and convince</font> people that their products better even though it's pretty much<font color="#E5E5E5"> the</font><font color="#CCCCCC"> same as</font>

other competitors let's jump straight in the graph it looks like this we've got a demand marginal revenue boo we've got a marginal cost at an<font color="#CCCCCC"> ATC they produce</font> where mi equals MC price up<font color="#E5E5E5"> to the man</font> it's exactly<font color="#CCCCCC"> the same as a monopoly so</font>

you think like how is<font color="#E5E5E5"> it</font><font color="#CCCCCC"> different it's</font> not that is<font color="#E5E5E5"> the same graph as a monopoly</font> but in the short run notice right now they're making<font color="#E5E5E5"> profit right they're</font> making profit because the price is above the<font color="#E5E5E5"> ATC that's not going to happen in</font>

the<font color="#E5E5E5"> long run it knocks competition other</font> firms can enter so if this<font color="#E5E5E5"> fast-food</font> restaurant was<font color="#CCCCCC"> in town and they're just</font> <font color="#E5E5E5">making so much profit there's a line</font> around the block other firms going to enter sell a slightly different product

right another burger but slightly different and when<font color="#E5E5E5"> they do that they're</font> <font color="#E5E5E5">going to come in and that's going to</font> cause the demand to go down so for this firm demands going to fall because<font color="#E5E5E5"> now</font> they have<font color="#E5E5E5"> more competitors and if you</font>

end up looking like this this is a monopolistically competitive firm in long run equilibrium this is the graph that you have to know now let's do the same thing except with the loss here's <font color="#E5E5E5">the demand marginal revenue marginal</font>

cost atc you got the box of loss what if firms going to do if they're making a loss well eventually they're going to leave right might as well just leave <font color="#E5E5E5">I'll go do something else as opposed to</font> making burgers so what will happen<font color="#CCCCCC"> well</font>

the demand for the remaining firms is going to go up if that demand goes up it's going<font color="#CCCCCC"> to move</font> like there we've got price quantity back to long run this<font color="#E5E5E5"> is the graph forma</font> novice competition in long run

equilibrium and like a monopoly they're inefficient so they're not allocated ly efficient notice they're not producing or the price equals marginal cost the price is greater than marginal cost at qlr they should be producing qso to be

socially optimal so again they're causing<font color="#CCCCCC"> their weight loss not allocated</font> <font color="#E5E5E5">ly efficient they're also not</font> productively efficient they're not producing at the minimum<font color="#CCCCCC"> ATC which is</font> right here<font color="#CCCCCC"> all right they're producing</font>

less output because they want<font color="#E5E5E5"> to</font> maximize profit not get their costs as low as possible that leads to a concept <font color="#E5E5E5">you might hear called excess capacity</font> this means they are holding back production and their costs are a little

bit higher because they<font color="#E5E5E5"> want to maximize</font> profit so excess capacity means they have machines and workers and aren't fully getting youth because<font color="#E5E5E5"> if they did</font> use them their<font color="#CCCCCC"> costs would be actually a</font> <font color="#E5E5E5">little lower they'd be right there at</font>

<font color="#CCCCCC">kew productive efficiency as opposed to</font> right here at qlr to maximize profit again it's<font color="#CCCCCC"> time</font><font color="#E5E5E5"> to take out the ultimate</font> review packet do<font color="#E5E5E5"> the section that talks</font> about monopsony<font color="#E5E5E5"> shin be able to draw</font> that<font color="#E5E5E5"> graph and show what</font><font color="#CCCCCC"> happens in</font><font color="#E5E5E5"> the</font>

long run and if you need more details <font color="#CCCCCC">about monopolistic competition and</font> differentiated products and what the graph looks like go ahead<font color="#CCCCCC"> and click</font> right here on this video give you a lot more<font color="#E5E5E5"> details and I give you here now</font>

<font color="#E5E5E5">it's time for the last of the four</font> market structures oligopolies now most students think this is probably the coolest want to learn about because you to learn<font color="#E5E5E5"> about game theory but first you</font> can tell<font color="#E5E5E5"> about the characteristics by</font>

where it's situated right it's<font color="#E5E5E5"> kind of</font> like monopsony<font color="#E5E5E5"> shin but it's kind of</font> like a monopoly it's kind of right there <font color="#CCCCCC">this is the idea of there's a market</font> with relatively few firms that are<font color="#E5E5E5"> very</font> large so less than<font color="#CCCCCC"> 10 firms kind of</font>

control this market there's identical or differentiated products the products <font color="#E5E5E5">don't really matter there's high</font> barriers to entry it's very hard to jump <font color="#E5E5E5">in this market there's a lot of control</font> <font color="#E5E5E5">of the price they have control of their</font>

price and last one they're mutually interdependent right these firms use strategic<font color="#CCCCCC"> pricing they gotta worry about</font> the<font color="#E5E5E5"> other guy that's the way you want i</font> want you think they got<font color="#E5E5E5"> to worry about</font> what's the other guy going<font color="#E5E5E5"> to do all</font>

<font color="#CCCCCC">right some great examples are OPEC or</font> cell phone<font color="#E5E5E5"> service providers or car</font> producers there's<font color="#E5E5E5"> three reasons why</font><font color="#CCCCCC"> a</font> market like this<font color="#E5E5E5"> we get created first</font> because<font color="#CCCCCC"> of economies of scale there's</font> something about the production<font color="#CCCCCC"> of a</font>

product<font color="#E5E5E5"> that other firms can't enter a</font> cars is a great example<font color="#E5E5E5"> I can't compete</font> with Ford and Chevy and Toyota because it costs millions billions of dollars <font color="#E5E5E5">for me to start</font><font color="#CCCCCC"> my own factory produce</font> cars so there

very few firms because there's a conscious scale also<font color="#CCCCCC"> there's a high</font> startup costs the same idea or they might<font color="#E5E5E5"> own some raw materials if there</font> are some companies that only own certain raw materials that<font color="#CCCCCC"> could be an oligopoly</font>

or it could actually be a monopoly the point is these are<font color="#CCCCCC"> three reasons why</font> there would be high barriers to entry and what other firms can't enter the market now we get the<font color="#E5E5E5"> jumping on the</font> idea of game theory game theory is the

study of strategy it's what firms use to figure out how to maximize profit if that guy does this then I should do<font color="#CCCCCC"> that</font> the way way to learn<font color="#CCCCCC"> about this is by</font> looking something called a game theory matrix it looks like<font color="#E5E5E5"> this we've got two</font>

different firms from one and from two and they're color-coded to help you see what's going on we're assuming there's two firms are competing<font color="#CCCCCC"> with each other</font> and they have a choice between pricing <font color="#E5E5E5">high or pricing level so think of two</font>

gas stations are too you know hotels next to each other and it gives us four possible outcomes they both go high they both go low one goes higher goes low the other one goes high anyone goes love in the chart the numbers on<font color="#CCCCCC"> the left are</font>

for firm 1 the numbers in<font color="#E5E5E5"> the right are</font> for firm too we're using this to figure out something<font color="#E5E5E5"> called a dominant strategy</font> and a Nash equilibrium a dominant strategy is the<font color="#E5E5E5"> thing that firms should</font> do<font color="#E5E5E5"> regardless what the other firm does</font>

now in this situation their dominant strategy for firm 1 is they're gonna go high or low or they might not<font color="#E5E5E5"> have a</font> dominant<font color="#E5E5E5"> strategy let's figure out what</font> firm one should do by letting firm to make a choice so if firm to decides to

go high which one should firm<font color="#CCCCCC"> 1 do well</font> let you go high because a hundred is better than 50 now firm 2 goes low which one should firm<font color="#E5E5E5"> 1 do well they should go</font> hi because<font color="#E5E5E5"> 60 is better to 20 in both</font> <font color="#E5E5E5">cases notice firm 1 will definitely</font>

price high pricing high is their dominant strategy and can<font color="#E5E5E5"> I circle these</font> help you see that concept firm<font color="#E5E5E5"> 1 no</font> doubt<font color="#E5E5E5"> about it should go high there's no</font> reason from ever to go low let's do the <font color="#E5E5E5">same thing for firm 2 and find their</font>

dominant strategy by letting firm 1 make a choice so if firm 1 were to price high what's better for firm to going high and get 50 or going low and getting 90 well they'd rather go low and get<font color="#E5E5E5"> 90 if firm</font> 1 were to go low which one's better for

firm to getting forty dollars by going high or going low and getting 10 well they'd rather go high notice<font color="#E5E5E5"> sometimes</font> they go low<font color="#E5E5E5"> sometimes they go high firm</font> 2 does not have a dominant<font color="#CCCCCC"> strategy</font> again you<font color="#E5E5E5"> don't have to</font><font color="#CCCCCC"> have a</font><font color="#E5E5E5"> dominant</font>

strategy it's a thing that you should <font color="#E5E5E5">always choose no matter what in this</font> case firm one has it on a<font color="#E5E5E5"> strategy firm</font> 2 does not now if both of these firms have all this information in front of <font color="#E5E5E5">them what are they going to choose to do</font>

where are<font color="#E5E5E5"> they going to</font> well that's<font color="#E5E5E5"> called a Nash equilibrium in</font> this situation there's<font color="#CCCCCC"> no doubt about</font> they'll end up right here firm one although high and firm 2 is going<font color="#E5E5E5"> to go</font> low the way I spot it<font color="#E5E5E5"> is one first I</font>

circled these earlier wherever there's <font color="#CCCCCC">circles on one square</font><font color="#E5E5E5"> that tells you</font> where they are<font color="#E5E5E5"> so no doubt about that's</font> the<font color="#E5E5E5"> Nash equilibrium but it also makes</font> sense think about firm<font color="#E5E5E5"> one we know is</font> gonna price<font color="#E5E5E5"> high we know that why</font>

because that's their dominant strategy and firm to knows that firm<font color="#E5E5E5"> one's going</font> to price high and that's our dominant strategy so they're<font color="#E5E5E5"> going to choose the</font> best<font color="#E5E5E5"> thing</font><font color="#CCCCCC"> for them which in this case</font> is going low and getting<font color="#E5E5E5"> 90 again the</font>

Nash equilibrium is where the firm is <font color="#E5E5E5">going to end up because they have no</font> incentive to deviate from that plan so being right here<font color="#CCCCCC"> is the</font><font color="#E5E5E5"> best</font><font color="#CCCCCC"> possible</font> thing each firm can do and if they switch over to something else it's going

<font color="#E5E5E5">to be worse for them again more than</font> anything<font color="#E5E5E5"> else I've taught</font><font color="#CCCCCC"> you this is</font> one<font color="#E5E5E5"> that you absolutely have to practice</font> so take out your ultimate review packet go try the practice<font color="#CCCCCC"> questions i gave you</font> spot who has a dominant<font color="#E5E5E5"> strategy figure</font>

out the Nash equilibrium make sure you can see<font color="#CCCCCC"> in spot bad stuff i also have a</font> bunch of practice videos on the playlist <font color="#CCCCCC">for this unit take a look at that also i</font> have a video using the<font color="#E5E5E5"> Dark Knight</font> explain this idea of game theory and

Nash equilibrium you're gonna like it it's hilarious<font color="#CCCCCC"> take a</font><font color="#E5E5E5"> look at this we're</font> not quite done with oligopolies there's three more concept<font color="#CCCCCC"> I want to talk about</font> first<font color="#E5E5E5"> there's really not one set type of</font> monopoly because they're different right

some are colluding and some are not colluding and summer you know<font color="#E5E5E5"> using</font> something else called price leadership there's<font color="#E5E5E5"> three concepts I'm going to</font> teach<font color="#E5E5E5"> you first price leadership</font> colluding oligopoly at a non-polluting

oligopoly so two<font color="#E5E5E5"> of these last two</font> actually have graphs go with it but pay attention it's easy stuff the first one is<font color="#E5E5E5"> called price leadership this is a</font> simple<font color="#E5E5E5"> concept colluding is illegal like</font> you can't go<font color="#CCCCCC"> and work at a contract and</font>

say we're<font color="#CCCCCC"> going to price high together</font> with other firms you can go to jail<font color="#E5E5E5"> for</font> <font color="#E5E5E5">that so cluding is illegal so how do you</font> get around it well firms can do what's called price leadership they watch each other and when one dominant firm starts

raising prices all<font color="#E5E5E5"> the other firms see</font> that and start raising their prices as well they're not<font color="#E5E5E5"> actively colluding but</font> they are definitely working in such a way that raises up prices so one dominant firm initiates price change

other firms follow the leader that's the <font color="#CCCCCC">idea of price leadership a colluding</font> oligopoly also called a cartel is when firms work together<font color="#E5E5E5"> and actively collude</font> and say<font color="#E5E5E5"> okay we're going to charge the</font> same prices and set quantity together

better pull this off cartels need be able<font color="#E5E5E5"> to set prices in quantity at</font> agreed-upon level they have to<font color="#E5E5E5"> have</font> similar costs and demand structures they have to have<font color="#CCCCCC"> a</font><font color="#E5E5E5"> way to punish the people</font> who cheat so if we decide to produce a

<font color="#E5E5E5">certain amount of output a certain price</font> and then you go ahead<font color="#E5E5E5"> and produce more</font> and sort of lower price try to undercut me that's not<font color="#E5E5E5"> going to last very long</font> cartel doesn't really last very long if people to have a way to<font color="#E5E5E5"> punish each</font>

other last one they work together as monopolies so the graph is easy the graph you already know its monopoly graph so we've got demand marginal revenue basically the idea of a colluding oligopoly there are three

firms all acting as one firm which is basically one from a monopoly the third type<font color="#CCCCCC"> of oligopoly gets a little more</font> complicated it's a non-polluting oligopoly so two firms that hate each other's guts and they're<font color="#E5E5E5"> going to have</font>

<font color="#E5E5E5">something called a</font><font color="#CCCCCC"> cake demand curve so</font> if there are two competitors and one decides to change their price the other firm has a choice what they want to do they<font color="#CCCCCC"> can either match the price or they</font> can ignore<font color="#E5E5E5"> it so here's what's going to</font>

happen if a firm lowers their price and their competitor sees that they<font color="#E5E5E5"> might</font> have<font color="#E5E5E5"> to lower the prices while they have</font> <font color="#E5E5E5">to match</font><font color="#CCCCCC"> that price if a firm raises</font> their price their competitor might see that big raise your price all you want

we're going to keep<font color="#E5E5E5"> the same price and</font> <font color="#E5E5E5">they'll get more customers and so that</font> <font color="#CCCCCC">actually creates a kink in the demand</font> curve and<font color="#E5E5E5"> it looks like this when the</font> price goes up so we're looking at my demand when my price goes up and<font color="#E5E5E5"> I raise</font>

my price then the my competitors decide to say well you raise it all you want and<font color="#E5E5E5"> they leave their price the same I'm</font> <font color="#CCCCCC">gonna</font><font color="#E5E5E5"> get way less customers so the</font> <font color="#E5E5E5">demand curve is actually elastic right</font> very sensitive to a change in price but

if I lower my price one of my competitors going to do well they're gonna see that lower price match it also lower their price and so my demand becomes inelastic so I don't<font color="#CCCCCC"> get</font><font color="#E5E5E5"> that</font> <font color="#E5E5E5">many more customers so my price goes</font>

down but their prices also go down and so my demands more inelastic what do you have you got a kink demand curve kinky that's gross weird<font color="#E5E5E5"> I can add</font><font color="#CCCCCC"> it a</font> marginal cost curve and the marginal revenue which looks like<font color="#E5E5E5"> this notice the</font>

marginal revenue has this vertical gap that's<font color="#E5E5E5"> inside there basically you've got</font> this concept except they're like overlaid on each other you got boom one that's elastic and this other one boom that's kind of inelastic that's what

you're looking<font color="#CCCCCC"> at for</font><font color="#E5E5E5"> a kick demand not</font> a<font color="#E5E5E5"> very good visual is it your teacher</font> professor may or may not teach<font color="#CCCCCC"> you this</font> concept I want to understand this idea this is a non-polluting oligopoly don't tell this video off yet there's one more

thing you definitely have<font color="#E5E5E5"> to do this can</font> help you practice right<font color="#CCCCCC"> here is this</font> <font color="#E5E5E5">giant Venn diagram so</font> we've got the<font color="#CCCCCC"> for market structures your</font> job is to put a bunch of characteristics on to this one of the things are going

to see on test is your teachers going<font color="#E5E5E5"> to</font> ask you what's<font color="#E5E5E5"> the main characteristic</font> of perfect competition or how is monopoly like knobs competition there's all these things<font color="#E5E5E5"> you just</font><font color="#CCCCCC"> learn you</font> gotta categorize when your brain

understand how they're all related so there's some things that go in the middle that<font color="#E5E5E5"> all for market structures</font> have in common there are some things that only apply to perfect competition of an OPS competition or oligopolies or

monopolies and there's some things that they share so your job is to<font color="#E5E5E5"> put in</font> these different characteristics in fact <font color="#E5E5E5">I'll give you a list to start you off</font> like where does mr equals MC where's the profit maximizing we will go<font color="#E5E5E5"> on this</font>

thing<font color="#CCCCCC"> where's identical products</font><font color="#E5E5E5"> we're</font> sufficient<font color="#CCCCCC"> whereas normal profit</font> deadweight loss which one of these market structures have these different characteristics a lot of students think that this is<font color="#E5E5E5"> one of the hardest units in</font>

all of microeconomics so you definitely need to practice take out<font color="#E5E5E5"> the ultimate</font> review packet make sure you practice this entire unit if<font color="#E5E5E5"> you need more</font><font color="#CCCCCC"> help</font> go to<font color="#E5E5E5"> the unit platelets videos watch</font> those concepts go back and watch<font color="#E5E5E5"> this</font>

video over again practice practice practice because it's the<font color="#CCCCCC"> only way</font> you're actually<font color="#CCCCCC"> gonna</font><font color="#E5E5E5"> get it thank you</font> so much<font color="#E5E5E5"> for</font><font color="#CCCCCC"> watching ACDC econ and</font> getting the packet and supporting me and my channel<font color="#E5E5E5"> you are awesome thank you so</font>

<font color="#CCCCCC">much please subscribe until next time</font>

Video Description

This is the Micro Unit 4 Summary video. It's only available to people that have paid for the Ultimate Review Packet. Thank you so much for supporting ACDC Econ.
This video covers everything you need to know about monopolies (0:49), government regulation (fair return and socially optimal) (15:18), price discrimination (16:48), monopolistic competition (20:01), oligopolies (23:16), game theory, and the kinked demand curve model. This unit focuses on the theory of the firms and is one of the most difficult units. It requires you to put everything together, including things that you learned in Unit 3 like cost curves, profit maximization, and efficiency. Make sure to practice. Thanks for watching. Please subscribe.

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