Chapter_12

Chapter_12 - Chapter 12 MONOPOLY Todays lecture will:...

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MONOPOLY Chapter 12 Chapter 12
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Today’s lecture will : Summarize how and why the decisions facing a monopolist differ from the collective decisions of competing firms. Explain why MR = MC maximizes total profit for a monopolist. Determine a monopolist’s price, output, and profit graphically and numerically.
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Definition of Monopoly Monopoly is a market structure in which one firm makes up the entire market. Barriers to entry into the market prevent competition. There are no close substitutes for the monopolist’s product.
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Profit-Maximizing Level of Output The goal of the firm is to maximize profits, the difference between total revenue and total cost. A firm maximizes profit when MR = MC. Marginal revenue (MR) – the change in total revenue from an additional unit sold. Marginal cost (MC) – the change in total cost from an additional unit production.
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Equilibrium Price and Quantity Output Price=AR TR MR TC MC ATC Profit 0 36 0 47 –47 1 33
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Chapter_12 - Chapter 12 MONOPOLY Todays lecture will:...

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