In noncompetitive markets, however, monopolists face our more familiar downward- sloping demand curve, which makes it more difficult to find the point where MR = MC. Here is where it gets a little tricky: competitive firms receive exactly the same amount of revenue (P) for each additional unit of product. They are price-takers, (as are households in a competitive market). A monopolist doesn't have this fixed marginal revenue. Let's take another look at Pepsi-as-a- monopolist: Pepsi could try selling its cola at $10000 a can. They might be able to sell one can. The marginal revenue on that first can is $10000. To sell two cans, however, Pepsi might have to lower its price to $7000 a can, to make a total of $14000. The marginal revenue on the second can is less than $10000. As Pepsi sells more and more cans of soda, the marginal revenue continues to drop.
This is the end of the preview.
access the rest of the document.