ECO 304K Lecture Notes - Lecture 12: Natural Monopoly, Demand Curve, Marginal Cost

• School: UT-Austin
• Department: Economics
• Course: ECO 304K
• Professor: Thomas Wiseman

Document Summary

A monopoly is a single seller that can raise price and make positive profit without causing entry. Either buy it all up, patents & copyrights. A monopoly can raise price w/o losing all its quality demanded. Key idea: for monopolist, marginal revenue always < price. Make lower price, but make less money on items you would have sold anyways. If change in q>0, change in p0. If at the current q, ed < 1. If ed= 1, monopolist should raise price, quantity go down. So at q^m, it must be that ed>1.