ECN437MonopolyBehavior - cost: MR = MC What makes a...

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ECN437 Monopoly Behavior What do monopolists do? If the monopolist is a private firm, generally we  assume that it chooses the level of output to maximize profits. As an  accounting matter, profits (PR) are equal to total revenue (TR) minus total  costs (TC): PR = TR - TC For  any  firm, not just a monopolist, it can be shown that profit will be  maximized at the quantity where marginal revenue is equal to marginal 
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Unformatted text preview: cost: MR = MC What makes a monopolist different from a competitive firm is that it faces a downward sloping demand curve: it knows that it will have to cut its price in order to sell more output. As a result, its MR curve will slope down rather than being flat like a competitive firm's....
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This note was uploaded on 04/03/2012 for the course ECN 437 taught by Professor Peterwilcoxen during the Spring '12 term at Syracuse.

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