Chapter Eleven CLASS NOTES

Chapter Eleven CLASS NOTES - Chapter Eleven CLASS NOTES...

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Chapter Eleven CLASS NOTES Chapter Eleven Monopoly  What is a monopoly? -One firm, no close substitutes, entry barriers -Barriers can be legal or natural -Unlike in perfect competition, there can be long run positive profits -They can price descriminate, different prices to different people may increase  profits Optimum Behavior of Monopolist -Profit is still maximized when MC= MR -Picks a point on the demand curve. (She sets her price and the market  determines the demand.) NO SUPPLY CURVE!!!!! -For any market demand schedule there is a single price and singe quantity not a  whole schedule -Profit = Q(AR-AC) -Short run profits are constrained by demand they need not be positive Under Monopoly, barriers to entry prevent new firms, so there is no downward  pressure on prices SEE SLIDE PC vs MONOPOLY Monopoly -Demand curve is downward sloping (PC it is flat and horizontal)
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Chapter Eleven CLASS NOTES - Chapter Eleven CLASS NOTES...

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