Good p17 q14 and p28 q23 mr tr p1q1 p2q2 28

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: and P2=8, Q2=3 MR = TR = P1*Q1 – P2*Q2 = 28 – 24 = 4 MR Q Q1 – Q2 1 6 MR of the 4th unit=4<7=P of selling 4 units Profit maximizing Q and P for Profit a Monopolist Monopolist MC = MR for a Monopolist graphically Price/Cost MC ATC Monopolist Profit = TR–TC = (Pm*)Qm*-(ATC at QM*)Qm* = (Pm*-ATC at Qm*)(Qm*) Pm* Economic Profit ATC at Qm* MC=MR MR Qm* Demand Quantity 7 Social Cost of a Monopoly as Social compared to a Competitive Market Market Competitive Market Monopoly Price/Costs Price/Costs MC=Supply MC ATC CS Pm* CS P* MR ATC at Qm* PS DWL PS Demand Q* Quantity MR Qm* Demand Quantity 8 Price Discrimination One way a monopolist causes a social cost is by price One discrimination. For example: Movie Theatres discrimination. Price Discrimination is selling a given product at more than one price, with the price difference being unrelated to differences in cost. differences A price discriminating monopolist charges some customers price more than others based upon personal preferences of the monopolist. monopolist. Required Conditions for a Monopolist to charge Required different prices different Firm must face a downward sloping demand curve Firm must be able to separate and identify buyers Firm Firm must be able to prevent resale of the product In a competitive market, buyers are charged the same In price for a couple of reasons: price Market sets the P Goods are homogenous between all of the sellers We assume buyers have full knowledge 9...
View Full Document

Ask a homework question - tutors are online