AP Microeconomics Unit 4 February 12, 2015 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 13, 2015 In Class Notes: 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 nd
Week 7 of 2 Semester February 18, 2015 In Class Notes: Unit 4 Section 1 (part 2) HW: Problem Set 2a and 3a HW: Print Monopoly Pricing Worksheet AND Monopoly Extra Practice
February 19, 2015 In Class: Complete Monopoly Pricing and Monopoly Extra Practice Worksheets HW: PS 1 (c,d,e) HW: Read: chapter 10 page 207-213 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 20, 2015 In Class Notes: Unit 4 Section 2 HW: PS 2b (you may have time to start in class) and PS 3b HW: Print Price Discrimination Worksheet Week 8 February 23, 2015 In Class: Price Discrimination Worksheet 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 24, 2015 In Class Notes: Unit 4 Section 3 HW: PS 5b and PS 2c HW Suggestion: Start reading and outlining for unit 4 section 4- it’s a lengthy outline! February 25, 2015 In Class: Oligopoly Preview Activity (Participation Required) HW: PS 6 (a-c) HW: Print Game Theory Worksheet HW: Read chapter 11 pages 223-228 (stop at Three Oligopoly Models) EC: 4.4.1 Outline 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 February 26, 2015 In Class Notes: Unit 4 Section 4 part 1 In Class: Game Theory Worksheet HW: Read ALL of chapter 9 EC: 4.4.2 Outline 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 B. Qualifications a. Increased foreign competition b. limit pricing c. technological advance February 27, 2015 In Class Notes: Unit 4 Section 4 (part 2) HW: Unit 4 Study Guide AND Submit Completed Problem Set to turnitin.com Week 9 March 2, 2015
In Class: Grade Problem Set HW: Submit EC Outline to turnitin.com
March 3, 2015
In Class: Unit 4 Exam- FRQ Section
March 4, 2015
In Class: Unit 4 Exam- Multiple Choice Section HW: Print Exam Corrections Form
March 5, 2015
Student Free Day (Staff Development)
March 6, 2015
Student Free Day (Staff Development)
