Chapter 12 econ - $5.75MC D=P Q QS=9 Q 5.75QMR MC MRP DQ...

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P Q D MR P MC Q * Q D MR P * ATC P MC D Q * P * MR ATC D Q MC P Q D P * ATC MR Q * P MC MR Q ATC D = P 5.75 P MC D = P Q MR $5.75 Q S  = 9 Chapter  13 MONOPOLY How Monopoly Arises: Examples of Monopolies 13 -  *
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Regulated and Unregulated Monopoly Regulated monopoly Single-Price Monopoly 13 -  *
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Demand and Revenue 13 -  *
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To see why MR < AR (= P = demand): 13 -  *
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Monopoly, Costs, Revenue and Profit Q P TR TC TR - TC MC MR ATC 0 1 2 3 4 5 6 7 8 9 10
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11
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Example:   o P 1   7.50 o P 0   7.75 o Q 0 1
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What happens to total revenue?
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Marginal Revenue and Elasticity o On what part of the curve will a monopolist produce?
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Price and Output Decisions o To maximize profits, a monopolist will produce where:
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M onopolist’s Profit Maximizing Output Level
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Does the monopolist make a profit?
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Monopoly Profit P > ATC
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Monopoly Loss P < ATC
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Monopoly Breaks Even P = ATC
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Monopolist’s Profit Profit = (P – ATC) x Q = 5.75-4.36) x9 = 1.39 x 9 $12.51
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