Ch 10 Monopoly

Ch 10 Monopoly - Monopoly 23:17 ,amonopolistfacesa...

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Monopoly 23:17 Unlike a perfect competitive firm, a monopolist faces a  neg. slope d-curve The monopolist’s MR < selling price of output. Thus, MR is below d-curve Monopolist’s are PRICE-SETTERS Nothing guarantees that a monopolist will make positive profits in the SR, but if it suffers  persistent losses, it will eventually go out of business. For a monopolist, there is no unique relationship b/w market price and quantity of output  supplies. Therefore  do not have a supply curve. A PC industry produces a level of output such that price=MC, monopolists produce a  lower level of output, with price>MC A monopolist restricts output below the competitive level and thus reduces amount of  economic surplus generated in the mkt.  The monopolist   creates an inefficient market  outcome. If mono. profits are to persist in LR, entry of new firms mustbe prevented In competitive industries, profits attract entry erodes profits. In monopolized industries,  positive profits can persist as long as there are effective entry barriers. Short-run Assumptions:
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This note was uploaded on 10/19/2011 for the course ECON 101/102 taught by Professor Gateman&neary during the Spring '09 term at UBC.

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Ch 10 Monopoly - Monopoly 23:17 ,amonopolistfacesa...

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