L14 - Price Elasticity of demand, profit maximisation and joint surplus

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4 Terms

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What does product differentiation imply about the demand curve

Downward sloping

2
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PED

-(Change in Q / Q) / (Change in P / P)

3
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Is joint surplus the same as welfare?

No,

Producer surplus does not account for fixed costs, the implication being profits are a better measure of benefit to the seller

Different buyers (say of different income levels) may place different valuations on the consumer surplus achieved

4
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Do firms for differentiated products yield Pareto efficient outcomes?

No