ECN 212 Lecture Notes - Lecture 10: Marginal Revenue, De Beers, Demand Curve
Document Summary
All diagrams come from patricia ramirez de la vina"s powerpoint monopolies power point notes. Ecn 212 - lecture 10 notes - monopolies. De beers owns 90% of all diamond minds in the world. The government gives a single firm the exclusive right to produce a good. Single firm can produce entire market quantity at a lower cost than could several firms. Demand curve for individual firm is horizontal. The monopolistic demand curve is equal to the market demand curve. Marginal revenue < price, and can even be negative. In competitive firms, the marginal revenue is equal to the price. A monopoly does not have a supply curve. The quantity where marginal revenue = marginal cost. Monopolies charge a price such that p > (mr = mc) Pharmaceutical companies get patents for new drugs. They are the sole producer and can charge a higher price for their products. When the patent expires, the market becomes competitive as substitutes begin to appear.
