Ch. 15 Monopoly

Ch. 15 Monopoly - Chapter 15 Monopoly The opposite of...

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Chapter 15 Monopoly The opposite of competition
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Monopoly A firm is a monopoly if it is the sole seller of its product, if the product does not have close substitutes, and if barriers to entry protect the firm from potential competition.
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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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Similarity between analysis of competition and of monopoly Economists ask the same fundamental question for both types of market structure: what quantity will the firm choose to maximize profits?
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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 48 36 12
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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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Marginal revenue = New price + (Change in price x old quantity) Output Effect Price Effect
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This note was uploaded on 12/30/2011 for the course ECON Econ 200 taught by Professor Clement during the Fall '11 term at Maryland.

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Ch. 15 Monopoly - Chapter 15 Monopoly The opposite of...

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