Chapters+7++10-20-2006+

Chapters+7++10-20-2006+ - Monopolies produce at MR = MC...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
10-20-2006 1 Chapter 7 Monopoly Monopoly
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
10-20-2006 Chapter 6 – Slide 2 Monopoly Recall Definition of Market power: allows a firm  the ability to change market price of a product A monopolistic firm used its market power to  demand prices that are generally higher than  competitive firms.  Why? Competitive firms are faced with the threat of new  entrants, thus potentially lower market prices A monopolistic firm represents the industry as well ---  no competition to try to beat 
Background image of page 2
10-20-2006 Chapter 6 – Slide 3 Demand Curve Faces by Competitive  vs. Monopolistic Firm’s The demand curve faced by a  competitive  firm  is horizontal and market demand curve  is downward sloping The demand curve faced by a  monopolistic  firm  is the same as the market demand  curve --- downward sloping
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
10-20-2006 Chapter 6 – Slide 4 Profit Maximization for Monopolistic  Firms
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
Background image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Monopolies produce at MR = MC Marginal Revenue (MR) is the addition to total revenue when one more unit of product is produced If every unit of output could be sold at the same price, Marginal Revenue would be equal to Price MR is always < Price for a monopolist 10-20-2006 Chapter 6 Slide 5 Monopolies Profit Maximizing The intersection of MR and MC curves result in profit maximizing rate of output 10-20-2006 Chapter 6 Slide 6 Monopolistic Firms Profit Maximization Quantity $ Price P1 Market Demand Curve MC Avg Total Cost Profit Maximizing Production Rate for Monopolist is where MR = MC 10-20-2006 Chapter 6 Slide 7 Monopoly vs. Competitive Outcome Quantity $ Price Pm Market Demand Curve MC Avg Total Cost Profit Maximizing Production Rate for Monopolist is where MR = MC Pc...
View Full Document

This note was uploaded on 02/12/2010 for the course ECON 62000 taught by Professor Freed during the Spring '07 term at UC Irvine.

Page1 / 7

Chapters+7++10-20-2006+ - Monopolies produce at MR = MC...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online