monopoly - Monopoly One seller (market = firm) Monopoly One...

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Monopoly One seller (market = firm)
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Monopoly One seller (market = firm) Since the firm faces the market demand curve, it is a “price-maker.” (“price searcher”)
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Monopoly One seller (market = firm) No close substitutes
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Monopoly One seller (market = firm) No close substitutes Complete Barriers to Entry
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Barriers to Entry Control of Essential Resource
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Barriers to Entry Control of Essential Resource De Beers and Diamond mines
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Barriers to Entry Control of Essential Resource Economies of Scale
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Barriers to Entry Control of Essential Resource Economies of Scale efficiency gains to large scale production. Since inputs more productive, average costs fall . NATURAL MONOPOLY
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Barriers to Entry Control of Essential Resource Economies of Scale Legal Barriers
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Barriers to Entry Control of Essential Resource Economies of Scale Legal Barriers o Patents, copyrights o licenses o public franchises
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Revenue for a Monopolist Monopoly Power (Market Power): The ability to influence the market price. Better definition: The ability to maintain a price above MC.
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Two cases: 1) Single Price Monopolist Charges the same price for all units sold 2) Price Discrimination Charges different prices for different units sold.
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P Q TR MR 10 1 10 10 9 2 18 8 8 3 24 6 7 4 28 4 6 5 30 0 5 6 30 0 4 7 28 -2 3 8 24 -4 Demand Note that P > MR
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Can show that if Demand is linear, then MR is linear, with the same y-intercept and twice the slope as demand: $ Q MR D
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This note was uploaded on 04/07/2008 for the course ECO 210 taught by Professor Sun during the Fall '08 term at Grand Valley State University.

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monopoly - Monopoly One seller (market = firm) Monopoly One...

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