11-2MonoDem - 1 Monopoly Demand Curve Chapter 11-2 The...

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Unformatted text preview: 1 Monopoly Demand Curve Chapter 11-2 The Demand Curve The Demand Curve Facing a Monopoly Firm Facing a Monopoly Firm { In any market, the industry demand curve is downward- sloping . This is the result of the law of demand . Monopolist is the Industry Monopolist is the Industry { Critical to understanding the profit maximization of the monopolist is remembering that the monopolist is the industry because it is the sole producer. { Therefore the monopolist confronts a downward-sloping demand curve. The industry demand curve is the firms demand curve. Marginal Revenue { Recall that the marginal revenue (MR) is: Q TR MR = The Monopolists Price and Output Numerically { Remember is that marginal revenue is the change in total revenue that occurs as a firm changes its output. TR=P x Q TR=P x Q MR = Change in Total Revenue/ change in output MR = Change in Total Revenue/ change in output Another way to say it is: Another way to say it is: how much does your Total Revenue changes as you increase output...
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This note was uploaded on 01/01/2011 for the course ECON 101 taught by Professor E during the Spring '10 term at American College of Computer & Information Sciences.

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11-2MonoDem - 1 Monopoly Demand Curve Chapter 11-2 The...

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