Gus · Market Structures · Walter

Controlling the Market

Gus is set on controlling the market for meth in the Southwest. He has worked hard to eliminate the local drug cartel so that he can be the sole supplier. Being the only supplier of a product gives a firm market power to charge prices greater than marginal cost. While profit maximization still occurs where marginal cost equals marginal revenue, a firm with market power is able to charge a markup on top of the marginal cost. Further, the markup is inversely proportional with the price elasticity of demand coefficient (i.e. the more inelastic the demand, the higher the markup). As the number of substitutes (competitors) decreases, the demand for each firm becomes more inelastic, which, in turn allows the firm to charger higher prices.

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Foundations · Gus · Walter

Parking Lot Decision

Gus and his people leave the meeting at the hospital with Jesse and head back to their car in the parking garage. As they approach the car, Gus stops and begins to look around at the rooftops around the garage. Walter is on a nearby rooftop and hides as Gus stands right across from him waiting and thinking. He decides to abandon his car, as he fears it may be a trap.

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