4Chapter 9: Monopoly and Other Forms of Imperfect CompetitionSlide 19Profit Maximization forthe Monopolist±For a producerzMB= Marginal Revenue (MR) or a change in a firm’s total revenue that results from a one-unit change in outputChapter 9: Monopoly and Other Forms of Imperfect CompetitionSlide 20Profit Maximization forthe Monopolist±Marginal Revenue for the MonopolistzPerfect competition and monopolies ²Both increase output when MR > MC.²Calculate MCthe same way.²Do not have the same MRat a given price.o In perfect competition: MR = Po In monopoly: MR < PChapter 9: Monopoly and Other Forms of Imperfect CompetitionSlide 21The Monopolist’s Benefit from Selling an Additional UnitPrice ($/unit)Quantity (units/week)D882635•If P= $6, then TR= $6 x 2 = $12•If P= $5, then TR= $5 x 3 = $15•The MRof selling the 3rdunit = $3 (15-12)•For the 3rdunit, MR = $3 < P= $5Chapter 9: Monopoly and Other Forms of Imperfect Competition
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.