ECO100Y5 Lecture Notes - Lecture 10: Marginal Revenue, Demand Curve, Perfect Competition
sophiapham192 and 37296 others unlocked
53
ECO100Y5 Full Course Notes
Verified Note
53 documents
Document Summary
A monopolist must reduce the price that it charges on all units in order to sell an extra unit: mr is < p due to the reduction of price to sell an extra unit. Figure 10 1 a monopolist"s average revenue and marginal revenue: figure 10 -1 illustration: (1) mr is +ve till 5o units of sale as reductions in price between. Figure 10 2 short run profit maximization for a monopolist. *figure 10 2 illustrations* (1) choice of output mr = mc which is the profit maximizing q but the p charged to consumers is then determined by the dc. Atc than small firms: natural monopoly: occurs when the industry"s demand conditions allow no more than one firm to cover its costs while producing at mes. Another natural monopoly; setup cost: in the long run, a monopolist"s entry barriers are often circumvented by innovation of production processes and development of goods and services.