{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Principles of Economics- Mankiw (5th) 334

Principles of Economics- Mankiw (5th) 334 - 344 PA R T F I...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
344 PART FIVE FIRM BEHAVIOR AND THE ORGANIZATION OF INDUSTRY consumers who otherwise would not buy it. In the extreme case of perfect price discrimination, the deadweight losses of monopoly are completely eliminated. More generally, when price discrimination is imperfect, it can either raise or lower welfare compared to the outcome with a single monopoly price. monopoly, p. 316 natural monopoly, p. 318 price discrimination, p. 336 Key Concepts 1. Give an example of a government-created monopoly. Is creating this monopoly necessarily bad public policy? Explain. 2. Define natural monopoly. What does the size of a market have to do with whether an industry is a natural monopoly? 3. Why is a monopolist’s marginal revenue less than the price of its good? Can marginal revenue ever be negative? Explain. 4. Draw the demand, marginal-revenue, and marginal-cost curves for a monopolist. Show the profit-maximizing level of output. Show the profit-maximizing price.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}