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Unformatted text preview: Profit-Maximization Profit-maximizing level of output for all firms is the output level where firms’ MR = MC x Perfectly competitive firm’s MR = p*, so it will produce up to the point where p* = MC. x Monopolist produces up to the point where MR = MC, but this occurs at a lower output level than would occur if the industry were perfectly competitive (and monopolist sells at a price that that exceeds MR and MC) x The key idea here is that firms will produce as long as marginal revenue exceeds marginal cost. Q F p MC D F = MR Q M p MC D M MR monopolist p* MR = MC p M comp. firm Page 109...
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This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.
- Fall '10