ECO100Y5 Lecture Notes - Lecture 10: Average Variable Cost, Demand Curve, Price Discrimination
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ECO100Y5 Full Course Notes
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Why is marginal revenue less than price: rules to maximize profit, example. P = 12 q: the efficiency loss, natural monopoly. Monopoly one seller in a market: requirement. A monopoly has no close substitutes: types of monopoly. Natural monopoly monopoly increases naturally , there is only one room for one firm. Franchise monopoly government gives a company the ultimate authority, otherwise called unnatural monopoly. The price maker drop his or her price in order to sell more. Why is marginal revenue less than price in a monopoly. The monopolist"s marginal revenue (mr) is less than the price at which it sells its output. Thus the monopolist"s mr curve is below the demand curve. Mr is less than the price because the price must be reduced on all units in order to sell an additional unit. Rules of maximizing profit in a monopoly market. A monopoly market has both the short run and long run.
