Chapter 15 - DECREASE PRODUTION I.A.1.a If marginal cost is...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Outline Saturday, October 16, 2010 12:41 PM I. The Key Difference between a Monopolist and a Perfect Competitor I.A. Takes into account that its output decision can affect price; its marginal revenue is not its price. I.A. If I increase production, my price will fall. Be careful how much I increase production. I. A Model of Monopoly I.A. Determining the Monopolist's Price and Output Numerically I.A.1. Because an increase in output lowers the price on all previous units, the marginal revenue is below its price. I.A.1. If marginal cost exceeds marginal revenue, increasing production reduces profit. The Monopolist should not do it. I.A. Determining the Monopolist's Price and Output Graphically I.A.1. MR=MC Determines the Profit-Maximizing Output I.A.1.a. If marginal revenue is below marginal cost (making less than producing), you decrease production which causes marginal cost to decrease and increases marginal revenue. MR < MC ,
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: , DECREASE PRODUTION! I.A.1.a. If marginal cost is below marginal revenue, you should increase production because total profit will rise. MR > MC, INCREASE PRODUCTION! I.A.1.a. If marginal revenue is equal to marginal cost, it does not make sense to increase or reduce production. MC = MR, MAX PROFIT! I.A.1. The Price of a Monopolist Will Charge I.A.1.a. Quantity determines the price. You can see this by examining the demand curve. I.A. Comparing Monopoly and Perfect Competition I.B. An Example of Finding Output and Price I. Profits and Monopoly I.A. A Monopolist Making Profit I.B. A Monopolist Breaking Even and Making a Loss I. The Welfare Loss from Monopoly I. The Price-Discriminating Monopolist I. Barriers to Entry and Monopoly I.A. Natural Ability I.B. Economies of Scale I.C. Government Created Monopolies I. Normative Views of Monopoly I. Government Policy and Monopoly: AIDS Drugs...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern