CH-15 PPT - Chapter15 Monopoly Microeconomics...

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Click to edit Master subtitle style 9/25/11 Monopoly M icroeconomics P R I N C I P L E S   O F N. Gregory Mankiw Chapter 15
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9/25/11 Monopoly A firm is a monopoly if it is the sole seller of its product and the product does not have close substitutes.
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9/25/11 $ Market Q Firm Q $ DM SM $5 $5 DF
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9/25/11 Price Discrimination A single-price monopoly is a firm that sells each unit of its output for the same price to all its customers. A firm practices price discrimination when it sells different units of a good or service for different prices.
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P Q TR TC Profit 18 1 18 6 12 16 2 32 10 22 14 3 42 15 27 12 4 48 21 27 10 5 50 28 22 8 6 36 12
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9/25/11 Marginal Revenue Marginal revenue is the change in total revenue from an additional unit sold.
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P Q TR TC Profit MR 18 1 18 6 12 18 16 2 32 10 22 14 14 3 42 15 27 10 12 4 48 21 27 6 10 5 50 28 22 2 8 6 48 36 12 -2
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9/25/11 Marginal revenue = New price + (Change in price x old quantity)
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9/25/11 Q New Price Change in Price x Old Q Marginal Revenue 5 10 -2 x 4 = -8 2 6 8 -2 x 5 = -10 -2
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9/25/11
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CH-15 PPT - Chapter15 Monopoly Microeconomics...

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