AP Microeconomics Unit 4 February 1, 2017 • CW: None (If needed: complete U3 Exam Corrections) • HW: PS 1a and 1b • HW: Read chapter 10 page 194-200 (stop at Output and Price Determination) • EC: 4.1.1 Outline I. An Introduction to Pure Monopoly a. Single Seller b. No close substitutes c. Price Maker d. Blocked Entry e. Nonprice Competition A. Examples of Monopoly B. Dual Objectives of the Study of Monopoly II. Barriers to Entry A. Economies of Scale B. Legal Barriers to Entry a. Patents b. Licenses C. Ownership or Control of Essential Resources D. Pricing and Other Strategic Barriers to Entry III. Monopoly Demand A. Marginal Revenue is Less Than Price B. The Monopolist is a Price Maker C. The Monopolist Sets Prices is the Elastic Region of the Demand Curve February 2, 2017 • In Class Notes: 4.1.1 (Unit 4, Section 1, Part 1) • HW: Problem Set: 4 (a-b) • HW: Read chapter 10 page 200-207 (stop at Price Discrimination) • EC: 4.1.2 Outline I. Output and Price Discrimination A. Cost Data B. MR=MC Rule C. No Monopoly Supply Curve D. Misconception Concerning Monopoly Pricing a. Not Highest Price b. Total, Not per-unit Profit E. Possibility of Losses by Monopolist II. Economic Effects of Monopoly A. Price, Output and Efficiency B. Income Transfer C. Cost Complications a. Economies of Scale b. X-Inefficiency c. Rent-seeking Expenditures d. Technological Advance D. Assessment and Policy Options February 3, 2017 • In Class Notes: 4.1.2 (Unit 4, Section 1, Part 2) February 6, 2017 • In Class: PS 2a (FRQ #1) and PS 3a (Regulating Monopolies) • HW: PS 1 (c,d,e) • HW: Read: chapter 10 page 207-213
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EC: 4.2 Outline I. Price Discrimination A. Conditions a. monopoly Power b. Market Segregation c. No resale B. Examples of Price Discrimination C. Graphical Analysis II. Regulated Monopoly A. Socially Optimal Price: P=MC B. Fair-Return Price: P=ATC C. Dilemma of Regulation
February 7, 2017 • In Class Notes: Unit 4 Section 2 • CW: PS 3c (Price Discrimination Worksheet) February 8, 2017 • In Class: PS 2b-2c (FRQ 2 and FRQ 3) AND PS 3b (A Quick Review…) • HW: PS 5a • HW: Read chapter 11 page 216-223 (stop at Oligopoly) • EC: 4.3 Outline I. Monopolistic Competition A. relatively Large Number of Sellers a. Small market shares b. no collusion c. Independent Action B. Differentiated Products a. Product Attributes b. Service c. Location d. Brand Names and Packaging e. Some Control Over Price C. Easy Entry and Exit D. Advertising E. Monopolistically Competitive Industry II. Price and Output in Monopolistic Competition A. The Firm’s Demand Curve B. The Short Run: Profit or Loss C. The Long Run: Only a Normal Profit a. Profit: Firms Enter b. Losses: Firms Leave c. Complications III. Monopolistic Competition and Efficiency A. Neither Productive nor Allocative Efficiency B. Excess Capacity IV. Product Variety A. Benefits of Product Variety B. Further Complexity February 9, 2017 • In Class Notes: Unit 4 Section 3 • HW: PS 5b • HW Suggestion: Start reading and outlining for unit 4 section 4- it’s a lengthy outline! February 10, 2017 • In Class: Oligopoly Preview Activity (Participation required to receive credit) • HW: PS 6 (a-c) • HW: Read chapter 11 pages 223 until the end of the chapter
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EC: 4.4 Outline (This outline is long, complete by Wednesday with your reading) I. Oligopoly A. A few Large Producers B. Homogeneous or Differentiated Products C. Control over Price, but Mutual Interdependence D. Entry Barriers E. Mergers F. Oligopolistic Industries a. Localized Markets b. Interindustry Competition c. World Trade d. Dominant Firms II. Oligopoly Behavior: A Game-Theory Overview A. Mutual Interdependence Revisited B. Collusion C. Incentive to Cheat III. Three Oligopoly Models a. Diversity of Oligopolies b. Complications of Interdependence A. Kinked-Demand Theory a. Match price changes b. Ignore price changes c. A combined strategy d. Price Inflexibility e. Criticisms of the Model B. Cartels and Other Collusion a. Price and Output b. Overt Collusion: The OPEC Cartel c. Covert Collusion: Examples d. Obstacles to Collusion i. Demand and Cost Differences ii. Number of Firms iii. Cheating iv. Recession v. Potential Entry vi. Legal Obstacles C. Price Leadership Models a. Leadership Tactics i. Infrequent price changes ii. Communications iii. Limit pricing b. Breakdowns in Price Leadership IV. Oligopoly and Advertising A. Positive Effects of Advertising B. Potential negative Effects of Advertising V. Oligopoly and Efficiency A. Productive and Allocative Efficiency (continued on next page) B. Qualifications a. Increased foreign competition b. limit pricing c. technological advance
February 13, 2017 In Class: Notes 4.4.1 (Unit 4, Section 4, Part 1) • HW: Complete your reading (and corresponding extra credit) that was assigned last Friday
February 14, 2017 • In Class: Notes 4.4.2 (Unit 4, Section 4, Part 2) • CW: PS3d (Prisoner’s Dilemma) • HW: Submit Completed Problem Set to turnitin.com February 15, 2017 • In Class: Grade Problem Set • HW: Print the Unit 4 Study Guide and bring it (along with your U4 Notes) with you to class tomorrow • HW: **bring in Extra Credit outline (hardcopy) tomorrow February 16, 2017 • In Class: Unit 4 Study Guide, Stamp Extra Credit, Submit U4 Notes • HW: Study! February 17, 2017 • In Class: Unit 4 Exam- FRQ Section February 21, 2017 • In Class: Unit 4 Exam- Multiple Choice Section • HW: Print Exam Corrections Form February 22-23, 2017 • In Class: Unit 4 Exam Corrections • HW: Print U5PS and Read 269-271* (tentative)
