Awesome clarification 😀 Took me 30 years to get Monopoly issues explained correctly by someone who knows what’s he talking about👍 I’m requesting my book fee back from my college😡
Can you please answer- I've watched this like 3 times now and still dont understand the profit control one. To clarify, is capital employed the amount spent by a business- so its costs? or are you referring to capital as in factor inputs? I'm really confused- I thought this was like a ROCE (as in return on costs/money), but in this you are talking about capital goods?
I think it means that firms who employ more capital can receive additional profit. This is because it is beneficial to consumers as more capital can increase productive efficiency, so to encourage this firms will be rewarded (incentivised)
how does marginal cost increase with windfall taxes. Why do the costs of production increase if there is a reduced amount of profit for a firm. If anything reduced profit will incentivise firms to lower their costs or production.
Around the 5 minute mark, you mention a couple of times that if firms succeed in cutting costs to the point where they can still make significant profit, even when a price maximum of RPI-x is imposed, this may lead to regulating bodies !!reducing!! x, which would make it harder for them to continue making high levels of profit. Since the co-efficient of x is -1, wouldn't it be an increase in x that made it harder to maintain high levels of profit?
When we reduce a negative number, we make it larger but due to the minus sign, it becomes smaller as it goes further away from zero. For example, -5 is less than -1.
I don't understand how in an essay you can relate the point about RPI-X or RPI+/-k to the minimum price diagram for monopoly, they appear as though they are different concepts?
From what I can gather, you are right that they are different concepts, but RPI, RPI-X and RPI+/-K are just different ways by which the price is regulated, so they (should) lead to similar outcomes. For example, RPI-X allows the monopolist to increase prices by the inflation rate (RPI) minus whatever quantity the regulator deems 'X' should be, so the ultimate goal still remains that price is regulated, and it is up to the monopolist themselves to reduce costs, as Dal was referring to. That is how you can apply that diagram to an essay. The '-X' and '+/-K' are just slightly different ways by which the regulators ensure that they aren't squeezing monopolists too tightly, limiting dynamic efficiency, which is the major benefit of a monopoly. This is especially relevant if you are applying natural monopolies in your regulation answer **Disclaimer, I'm only doing my A-Levels too so I'm not sure this is right but it is my interpretation of what Dal said x
@@Josh-ud1vr the way I see it now that makes more sense is that the rate of price increases is slower , which essentially caps the level of prices for a monopoly (which is essential max price) But also, going back to what he said at the start, if costs are generally increasing, the marginal costs are shifting up too, leading to higher prices, when unregulated it leads to very high prices when profit max motives occur, but essentially Maximum price line also shifts up to limit it back to allocatively efficient outcomes This is my guess :P
@@Josh-ud1vr yea that's my guess, in an exam I think I'll subtly brush by this confusion and just say effectively price regulation caps prices for monopolies to prevent unregulated abuse of monopoly power,this is shown in the diagram below 😂😂😂
@@master4755 sounds like a plan. I'm hoping for price discrimination as the Economic Review did a brilliant article essentially giving you an essay answer. Last time price discrimination came up (in Northern Ireland) was 2019 so technically one session ago but fingers crossed lmao
1) RPI-firms can only increase prices at the rate that inflation is increased. This prevent excessive price increases whilst allowing the firm to earn enough profit to cover their costs. 2) RPI-X- this means firms can only increase prices at a rate that is lower than inflation, meaning that if they don't cut their costs and achieve productive and X-efficiency, then they will potentially make a loss. It creates an incentive for efficiencies to be achieved. 3) RPI +/- k- a) If +k, this allows firms to increases prices at a rate that is greater than inflation in order to fund capital investment. b) If -k then firms are not able to increases prices at a rate that is greater than inflation to facilitate capital investment and hence their is the incentive to cut costs and achieve efficiencies.
has profts a firm can make are less than before. with the same AC they are becoming less profitable. So a tax on profits with give firms an incentice to invest to lower their cost of production. Still have a large amounts of profits in the LR.
Depends on context and hypothecation of the tax, the govt may ringfence the tax revenue and spend it on a public service that benefits consumer welfare, also it encourages the monopoly to behave prod efficient
How would windfall taxes worsen the monopoly if it would just take the supernormal profits generated by the monopoly, whilst having no effect on the output nor the price (since it's still producing at where MR=MC)?
suppose you could argue that tax reduces a monopoly's ability to become more dynamically efficient, thus consumers may fiace higher prices in future as firms become less efficient
@@nicholasmichael248 It also forces AC up so costs increase-this can mean the monopoly will raise prices which is possible if the product has an inelastic demand curve. Higher prices worsens monopoly outcomes.
![แฉกลโกงงานวัด 2024 [ โกงมั้ยครับ ep.106 ] | DOM](http://i.ytimg.com/vi/taC5dpP3HXA/mqdefault.jpg)
This is really helpful when all my college gives me is a thick booklet on competition policy. Thank you for making it so much easier!
Who else is DALLING HARD rn?
wish I was DALLING HARD back then smh
@@noahlayzell5018 same looool im fucked craming in DAL
@@noahlayzell5018 what did u get
@@antio7271 what did u get
@@abdirahmanmumin u got a levels in like 3 weeks too innit
Awesome clarification 😀 Took me 30 years to get Monopoly issues explained correctly by someone who knows what’s he talking about👍 I’m requesting my book fee back from my college😡
You are the gift that keeps on giving
you can be my hero baby
good afternoon good man, you the one and only! YUNG DAL ON THE TRACK🤓
Thank you for videos. I'm peruvian and I recommend your videos to my partners! Congratulations!
Anyone watching dal for las minute revision?
THANK YOU SOOOOO MUCH DALY
Stunning video, Dal!
At 4:53 wouldn't a reduction in 'x' benefit the firm as RPI-x would be higher?
Yes, I meant reduce RPI-x so an increase in x
EconplusDal thanks for clearing that up :)
Can you please answer- I've watched this like 3 times now and still dont understand the profit control one. To clarify, is capital employed the amount spent by a business- so its costs? or are you referring to capital as in factor inputs? I'm really confused- I thought this was like a ROCE (as in return on costs/money), but in this you are talking about capital goods?
I think it means that firms who employ more capital can receive additional profit. This is because it is beneficial to consumers as more capital can increase productive efficiency, so to encourage this firms will be rewarded (incentivised)
how does marginal cost increase with windfall taxes. Why do the costs of production increase if there is a reduced amount of profit for a firm. If anything reduced profit will incentivise firms to lower their costs or production.
Around the 5 minute mark, you mention a couple of times that if firms succeed in cutting costs to the point where they can still make significant profit, even when a price maximum of RPI-x is imposed, this may lead to regulating bodies !!reducing!! x, which would make it harder for them to continue making high levels of profit. Since the co-efficient of x is -1, wouldn't it be an increase in x that made it harder to maintain high levels of profit?
When we reduce a negative number, we make it larger but due to the minus sign, it becomes smaller as it goes further away from zero.
For example, -5 is less than -1.
That’s exactly what I thought I think he said it wrong
He confirms in response to another comment that he meant an increase in x and a decrease in RPI-x
I don't understand how in an essay you can relate the point about RPI-X or RPI+/-k to the minimum price diagram for monopoly, they appear as though they are different concepts?
From what I can gather, you are right that they are different concepts, but RPI, RPI-X and RPI+/-K are just different ways by which the price is regulated, so they (should) lead to similar outcomes. For example, RPI-X allows the monopolist to increase prices by the inflation rate (RPI) minus whatever quantity the regulator deems 'X' should be, so the ultimate goal still remains that price is regulated, and it is up to the monopolist themselves to reduce costs, as Dal was referring to. That is how you can apply that diagram to an essay.
The '-X' and '+/-K' are just slightly different ways by which the regulators ensure that they aren't squeezing monopolists too tightly, limiting dynamic efficiency, which is the major benefit of a monopoly. This is especially relevant if you are applying natural monopolies in your regulation answer
**Disclaimer, I'm only doing my A-Levels too so I'm not sure this is right but it is my interpretation of what Dal said x
@@Josh-ud1vr the way I see it now that makes more sense is that the rate of price increases is slower , which essentially caps the level of prices for a monopoly (which is essential max price)
But also, going back to what he said at the start, if costs are generally increasing, the marginal costs are shifting up too, leading to higher prices, when unregulated it leads to very high prices when profit max motives occur, but essentially Maximum price line also shifts up to limit it back to allocatively efficient outcomes
This is my guess :P
@@master4755 so they are all different ways of slowing down price rises, and in essence creating a cap?
@@Josh-ud1vr yea that's my guess, in an exam I think I'll subtly brush by this confusion and just say effectively price regulation caps prices for monopolies to prevent unregulated abuse of monopoly power,this is shown in the diagram below 😂😂😂
@@master4755 sounds like a plan. I'm hoping for price discrimination as the Economic Review did a brilliant article essentially giving you an essay answer. Last time price discrimination came up (in Northern Ireland) was 2019 so technically one session ago but fingers crossed lmao
"Such as the dynamic efficiency of benefits" ;) jk luv ya man! I would be nowhere without u!
Such a helpful video!
like your way of explaining! thanks
30 mins until my a level 😂
Jack Mcneill wat u get g
Mine soon 😢😢
Give him the knighthood. Saving my a levels
Help- i still dont understand price controls!
1) RPI-firms can only increase prices at the rate that inflation is increased. This prevent excessive price increases whilst allowing the firm to earn enough profit to cover their costs.
2) RPI-X- this means firms can only increase prices at a rate that is lower than inflation, meaning that if they don't cut their costs and achieve productive and X-efficiency, then they will potentially make a loss. It creates an incentive for efficiencies to be achieved.
3) RPI +/- k-
a) If +k, this allows firms to increases prices at a rate that is greater than inflation in order to fund capital investment.
b) If -k then firms are not able to increases prices at a rate that is greater than inflation to facilitate capital investment and hence their is the incentive to cut costs and achieve efficiencies.
2 days g
Best of luck man 👍🏻
10 Hours, shit
@@aaron9968 what did u get
What did u get
Same
Why are there no labour market videos in this playlist???????
Its a separate playlist
Many thanks.
The goat
So are profit controls designed to increase investment?? How?? Surely it would be just to remove them altogether?
has profts a firm can make are less than before. with the same AC they are becoming less profitable. So a tax on profits with give firms an incentice to invest to lower their cost of production. Still have a large amounts of profits in the LR.
Such a fan!
Why is there no AC curve on the monopoly diagram?
Cause there is a max price
Isn't a windfall tax a one off tax on profits and therefore something that wouldn't affect the MC curve?
Not guaranteed to be a one off taxation
How would a tax on supernormal profits increase the cost of production for firms?
Just say the tax is viewed as a cost because it is measured against revenue and lowers snp
wait is windfall taxs.a ne xample of regulation?? mty teachor satys no?
Yes
So what is the benefit of implementing a windfall tax to regulate a monopoly? All it does is increase tax revenue for the govt
Depends on context and hypothecation of the tax, the govt may ringfence the tax revenue and spend it on a public service that benefits consumer welfare, also it encourages the monopoly to behave prod efficient
It could also be reinvested into smaller businesses in the form of subsidies, loans, training etc to make the market more contestable
How would windfall taxes worsen the monopoly if it would just take the supernormal profits generated by the monopoly, whilst having no effect on the output nor the price (since it's still producing at where MR=MC)?
suppose you could argue that tax reduces a monopoly's ability to become more dynamically efficient, thus consumers may fiace higher prices in future as firms become less efficient
@@nicholasmichael248 It also forces AC up so costs increase-this can mean the monopoly will raise prices which is possible if the product has an inelastic demand curve. Higher prices worsens monopoly outcomes.
@@kanothekid408 How is tax a cost??
awesome sir
what is regulatory capture?
In essence it is corruption
i love you
bros saving us fr good luck for Thursday
revising for october resit gang
same
what exam board are you doing?
@@zk_011 what did u get
At QC is MR=0?
dumb duck
what is K?
K represents the level of investment
like if you are eating dal chawal and watching dal
Is it included in a level?
yes
Cramming
What did u get
Nationalisation?
probably not likely to be implemented by a market and competition authority like the CMA.
Is this AQA?
yes
you should be a teacher bro
god bless umate
this aqa?