Microeconomics Unit 4 COMPLETE Summary - Imperfect Competition

This video covers all of the key points of Unit 4 from the AP Microeconomics Course Exam Description (CED). Monopoly, price discrimination, monopolistically competitive firms, oligopoly, and game theory.
For more help with unit four, there are content reviews, review games, and practice exercises for you at: www.reviewecon.com/ap-microec...
To support this channel, like and subscribe, then purchase the Total Review Booklet from ReviewEcon.com.
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Note: Topics are out of order because this is the oder in which they are covered in the ReviewEcon.com Total Review Booklet.
Note: AP©, Advanced Placement Program©, and College Board© are registered trademarks of the College Board, which was not involved in the production of, and does not endorse, this material.

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[@ReviewEcon]

Thank you! Here's an article I wrote about game theory that might help. The prisoner's dilemma is the example. Good luck! www.reviewecon.com/oligopoly1

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[@ReviewEcon]

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[@amyliu7745]

At 9:35, is the light green shaded area supposed to go over/below the orange horizontal dotted line?

[@ReviewEcon]

The dotted line is part of the shaded rectangle. It goes from the ATC to the demand curve over to the y-axis. Then the entire upper triangle is also part of the profit, when perfect price discriminating.

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[@ReviewEcon]

Thank you! Good luck with your studies!

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Is there a term opposite for dominant strategy? Would that be Nash Equilibrium? Thanks for these videos btw!

[@ReviewEcon]

There isn't really a term (that I know of) for no dominant strategy. A Nash equilibrium is an outcome that would make an entity worse off is they change their strategy (without the other entity changing). So Nash equilibrium and dominant strategy are very different terms.

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[@t.4624]

Hi! I have a question for oligopoly. I'll ask the question based on your example. As you said, Tuan's Trims has dominant strategy but Sheron's snips doesn't. Why does Sheron's snips still have a " choice" to pick 1500? I thought 1600/1400 is the Nash equilibrium because Sheron's snips always have to follow Tuan's trims' decision.

[@ReviewEcon]

Sharon doesn't HAVE to do what Tuan does, but her best decision is based on what Tuan does. That's why she doesn't have a dominant strategy. Tuan's best move is independent of what Sharon does, and that's why he does have a dominant Strategy. The Nash equilibrium in this example is the lower right quadrant. Watch the video again to see how the choices break down. If each firm acts independently (choosing their best move based on the other's possible move), that is where they will end up.

[@t.4624]

@@ReviewEcon got it thanks :)

[@blapblopblup9276]

Hello Sir, your microeconomics summary video was very helpful for me in understanding Imperfect competition However, there are still various concepts I still haven't able to load my mind through Here are some of my questions that I hope you can help me find an answer to: The marginal revenue is the amount of revenue a firm receive after the sale of one additional unit, isn't that similar to price ? And why is the marginal revenue equal to price in perfect competition but not in imperfect competition

[@ReviewEcon]

For a perfectly competitive firm, MR is equal to the price. But for a single price monopoly, when they sell more, they lower the price on all units. As a result the MR is less than the price. If a monopoly can sell 2 units at $8 TR is $16. If they must lower the price to $7 so sell a 3rd unit TR is now $21. MR is just $5 ($21-16). It is lower than the price because the 3rd unit brought in $7 more dollars, but the price of the first two units was lowered by $1 so those to units bring in $2 less. As a result MR is $2 less than the price in this example. See here for more about it. www.reviewecon.com/monopoly I hope that helps!

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[@ReviewEcon]

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[@ReviewEcon]

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[@theon6716]

Do all payoff matrices have a nash equilibrium?

[@ReviewEcon]

No. It is possible for there to be no Nash. It is also possible for there to be two. If either entity has a dominant strategy, there will surely be a Nash. Good luck on your exams!

[@newfireidk6065]

Hello sir! I was just wondering if they'd be in anyways for me to send you an example in regards to second degree price discrimination (if possible) I'm just a bit confused about how, although there are three prices (PS - MC = MR, P1 discriminated for single buyers, P2 discriminated for bulk buyers), and quantity produced seems to be made and sold simultaneously at level of PS, profit is still being made for P1 and P2 It sounds a bit confusing, that's why I was just wondering if there'd be any chances for me to email you an example Thanks, your videos are awesome as always

[@newfireidk6065]

The example I got from is from this youtube video : kzbin.info/www/bejne/nmiWeZh5YpeGmLM The question of mine basically refers to how, if there are 6 unit produced and sold at PS, where did the extra 4 and 12 came from ? (for P1 and P2 respectively) Additionally, assume that these extra units came from somewhere, why isn't the graph also accounting for their cost ? (that might overlap profits made in PS)

[@ReviewEcon]

In that example, the first 4 units could be sold at a higher price of P1 (Mr. Welker made up the number to illustrate the point). While units 8-12 could be sold at a price of P2 (again those numbers were randomly choses by Mr. Welker to illustrate the point). For AP econnomics, we have a perfect price disctiminator that charges every price along the demand curve. This removes the stairstep revenue you see in Welker's video and causes MR to merge with the demand curve. I hope that helps!

[@newfireidk6065]

@@ReviewEcon Yep I understood it now sir, thank you!

[@newfireidk6065]

@@ReviewEcon So basically, Mr Walker’s example shows a firm producing a total of 12 units with each quantity within that 12 sold at different prices ?

[@ReviewEcon]

Yes. Each group of quantities was sold at a different price (from the demand curve above that quantity).

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[@ReviewEcon]

Click the "Check out with PayPal" icon. Try refreshing if it's not working for you.

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really hope this helps or my grade is going down the shitter

[@ReviewEcon]

I sure hope so too!! Good luck!🤞🤞🤞

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This pretty good but it did not talk about subsidies and price celings

[@ReviewEcon]

These videos follow the AP micro Course Exam Description from the College Board. Subsidies are in unit 2 and unit 6 and price ceilings are in 2 and 6. Good luck with your exams!

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You're welcome!

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Very cool!

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What about the AVC, do I just ignore it ???

[@ReviewEcon]

You only need to worry about the AVC when it's relevant to the question (like shut down point, etc.). Otherwise, you can ignore it.

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3:04

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Goat

[@ReviewEcon]

Thank you!

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[@ReviewEcon]

Yes! Good luck!

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Ending “monopoly” from Crashcourse Clifford in KZbin AP Econ teaching “industry”😂

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Just Joking😂

[@ReviewEcon]

That right. Low barriers to entry will do that! 🤘😎 Good luck on your exam!

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Do you have anything on globalisation

[@ReviewEcon]

Unfortunately I do not have any Review videos on globalization topics yet. In a few weeks I will make a review video covering international trade and foreign exchange. In the meantime, here is what I've got for you at ReviewEcon.com www.reviewecon.com/ap-macroeconomics-ced-alignment#CED6 Good luck!

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@@andrewmaimon3184 Advanced Placement. It's the level of the class

[@ReviewEcon]

Thanks for stepping in Andrew! I missed this reply. Yep, it's Advanced Placement (potential college credit class for high school students).

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Awesome! Good luck to her on this year's exams!