Ch 11 Monopoly - Monopoly Chapter 11 1 Market Structure 2...

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Monopoly Chapter 11 1
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Market Structure 2
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Monopoly Characteristics One seller with no close substitutes Significant barriers to entry Legal Monopoly: legal barriers such as patents, licenses, or copyrights Natural Monopoly: due to economies of scale, others cannot enter Artificial Monopoly: no real barriers to entry, but it exists nonetheless 3
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Monopoly Price-Setting Strategies Single Price monopoly: a firm that must sell each unit of its output for the same price to all its customers. If they didn’t use the same price for everybody, some customers would go to lower priced competitors. Price Discrimination: selling different of the good or service for different prices. Microsoft sells Windows at different prices to business and individuals Results in higher profit because the firm can obtain more profit from each individual 4
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Monopoly 5 Qd P TR MR 0 20 0 1 18 18 18 2 16 32 14 3 14 42 10 4 12 48 6 5 10 50 2 6 8 48 -2 7 6 42 -6 8 4 32 -10 9 2
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Ch 11 Monopoly - Monopoly Chapter 11 1 Market Structure 2...

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