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B200.F09.W09.Mono.PP

B200.F09.W09.Mono.PP - Monopoly Price Searcher Week 09...

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Monopoly: Price Searcher Week 09 Chapter 14
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Demand Facing the Firm $Price Qty/T Demand D $10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7 8
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Total Revenue $Price Qty/T Demand D $10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7
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Marginal Revenue =Additional Revenue $Price Qty/T Demand D $10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7
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Marginal Revenue $Price Qty/T Demand MR D
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$ P x $ 10 $ 9 $ 8 $ 7 $ 6 $ 5 $ 4 $ 3 $ 2 $ 1 1 2 3 4 5 6 7 8 9 10 Demand x Qty x /T Marginal Revenue & Elasticity of Demand Ed > 1 Ed < 1 Ed = 1 Marginal Revenue
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Monopoly Output $Price Qty/T Demand MR MC D Qm Pm Mc
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Market Power: No Close Substitutes $Price Qty/T Demand MR MC D Qm Pm Mc
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Market Power: Few Close Substitutes $Price Qty/T Demand MR MC D Qm Pm Mc
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Market Power: Many Close Substitutes $Price Qty/T Demand MR MC D Qm Pm Mc
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Price Taker: No Market Power: Many Identical Substitutes $Price Qty/T Demand MC P = MR Qm P = Mc
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Monopoly Profit? Monopoly Profit? Qty/T Demand MR MC D Qm Pm AC Profit
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Response to Profits Response to Profits New firms enter with similar products Demand declines and becomes more elastic Price falls, output falls and profits decline
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Effect of Competition Effect of Competition Qty/T D MR MC D Qm Pm AC $P
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Monopoly Efficiency Loss ?
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