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Unformatted text preview: though we’re all using macbooks right now (apple’s operating system). Price maker (monopoly) = this firm has a price policy. It’s searching around for where to set the price to maximize the firm. The firm should price along the demand curve of consumers. Marginal revenue is extra revenue for one more extra unit of output. Marginal revenue is difference of TR2- TR1 Marginal Revenue could be negative MC = MR is the profit maximizing rate of output. Highest price you can get for rate of output Q* is P* Shaded area is economic profit the firm receives. Profit = (P*-AC*) x Q* Demand can shift to the left, so it now has a new marginal revenue. If there are new firms of entry, the firms already in the market will cut their price and output and lose some revenue....
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