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Unformatted text preview: ECON1110 TA Section 11 Professor Jennifer Wissink TA Jingxian Zheng April 9, 2009 1 Concepts Review 1. Market Structure: Monopoly v.s. Perfectly Competitive Monopoly P.C. single firm (price maker) many firms (price taker) no close substitutes, only imperfect substitutes in related markets identical products barriers to entry and possibly exit free entry and exit full and symmetric information or possibly not full and symmetric information 2. The Simple Monopolist no price discrimination: Everyone pays the same market price for all units purchase. facing the market demand curve (declining): In monopoly, the firm is the industry. The total quantity supplied in the market is what the firm decides to produce. fi P > MR : for a market demand curve, e.g., P D = a- bQ , a , b >0 are coefficients. TR = P D Q = ( a- bQ ) Q = aQ- bQ 2 so MR = dTR dQ = a- 2 bQ and thus P D- MR = ( a- bQ )- ( a- 2 bQ ) = bQ > , if Q 6 = 0 ....
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