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micro econ study guide

micro econ study guide - MICROECONOMICS Final Study Guide...

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MICROECONOMICS Final Study Guide Chapter 9: Monopolies -What is a monopoly? -A firm that produces the entire market supply of a particular good or service. -What are the characteristics of a monopoly? -Closed market -no substitutes -price maker -What will be the demand curve of the downward sloping, monopoly? Pg. 106 market demand and firm demand look identical because the firm is the market -Marginal Revenue is above or below demand curve? BELOW, marginal revenue is less than price in a monopoly -Barriers to entry in a monopoly include: -taxes pg 199 -government -economies of scale= reductions in minimum AC that come about through increases in the size (scale) of plant and equipment. -Graphs on pages 202 and 203 -profit maximizing point: MC=MR -draw line down from profit maximizing to ATC curve and across And line up from Profit maximizing to Demand curve and Across to see total Profits
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-price equals marginal cost throughout process in -in a monopoly, a competitive industry price always exceeds marginal cost -price discrimination -the sale of an identical good at different prices to different consumers by a single seller (ex. Airline tickets to Business customers vs Vacationers- inelastic Vs elastic) - three degrees of price discrimination: -1 st : capture most of consumer’s income -2 nd :charge 2 or 3 different prices -3 rd : monopolists separate market geographically and charge diff prices -main idea: making profit off PD -Meaning of Natural Monopoly: pg. 211 -an industry in which one firm can achieve economies of scale over the entire range of market supply: one single firm can
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