E251x.F11.W10.Monopoly. Chapter 10

E251x.F11.W10.Monopoly. Chapter 10 - Monopoly: Price...

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Monopoly: Price Searcher Week 10, 2011 October 24 – 27, 2011 Chapter 10
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Demand Facing the Firm $Price Qty/T Demand D $10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7 8
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Total Revenue $Price Qty/T Demand D $10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7
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Marginal Revenue =Additional Revenue $Price Qty/T Demand D $10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7
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Marginal Revenue $Price Qty/T Demand MR D
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$Price Qty/T Demand MR Ed > 1 Ed < 1 Ed = 1
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Monopoly Output $Price Qty/T Demand MR MC D Qm Pm Mc
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Market Power: No Close Substitutes $Price Qty/T Demand MR MC D Qm Pm Mc
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Market Power: Few Close Substitutes $Price Qty/T Demand MR MC D Qm Pm Mc
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Market Power: Many Close Substitutes $Price Qty/T Demand MR MC D Qm Pm Mc
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Price Taker: No Market Power: Many Identical Substitutes $Price Qty/T Demand MC P = MR Qm P = Mc
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Monopoly Profit? Monopoly Profit? Qty/T Demand MR MC D Qm Pm AC Profit
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Response to Profits Response to Profits New firms enter with similar products Demand declines and becomes more elastic Price falls,output falls and profits decline
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Effect of Competition Qty/T D MR MC D Qm Pm AC $P
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Monopoly Efficiency Loss ?
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This note was uploaded on 02/11/2012 for the course ECON 251 at USC.

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E251x.F11.W10.Monopoly. Chapter 10 - Monopoly: Price...

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