lec08slides - MC 21 P> MC Less output than socially...

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1 1 Monopoly One firm No entry 3 Monopolist: sets price. faces demand curve. $ Q D p 1 Q 1
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2 4 Monopolist must lower price to sell extra units. $ Q D p 1 p 2 Q 1 Q 2 5 Marginal Revenue = extra revenue obtained from selling one extra unit of output. $ Q D p 1 MR 1 Q 1 MR
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3 6 $ Q D p 1 MR 1 Q 1 MR For a monopolist: MR < P. 8 AC MC $ Q Firm has MC and AC curves.
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