ECON101 Lecture Notes - Lecture 43: Economic Equilibrium, Demand Curve, Alcoa

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ECON101 Full Course Notes
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ECON101 Full Course Notes
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Monopoly: a single firm that makes up the industry. Barriers to entry: market franchise gives the firm the exclusive right to market the product in a specific jurisdiction, patent a firm can obtain a patent on a method of production or a product itself. Getting money is a real obstacle: cost advantage monopolist pays less per unit. The demand will be inelastic because there are no perfect substitutes for the product but there are substitutes. The marginal revenue curve is also negatively sloped and will be located below the demand curve. Mr additional to total revenue from the sale of each additional product (cid:1844) = (cid:1842)(cid:1876)(cid:1843) (cid:1844)= (cid:1844)(cid:1869) (cid:1844)=(cid:1842) (per unit revenue is price) (cid:1844)= (cid:1866) (cid:1866) (cid:1872)(cid:1867)(cid:1872) (cid:1870)(cid:1874)(cid:1866)(cid:1873) Equilibrium quantity- draw a line down to the horizontal axis. The equilibrium price is given by the schedule of prices. Don"t draw a horizontal line from the equilibrium to the vertical axis.

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