ECON 208 Chapter Notes - Chapter 10: Coupon, Perfect Competition, Economic Surplus
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ECON 208 Full Course Notes
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Monopolist that charges single price for its product. Revenue concepts for a monopolist: demand curve equals revenue curve for the product a monopoly sells. Also equals the average revenue curve, as they just sell one product. Negatively sloped, unlike perfectly competitive firm: sales can be increased only if price is reduced, and vice versa, marginal revenue. Because a firm must reduce its price on all products to grow quantity, marginal revenue is constantly decreasing, thus, mr = p (lost revenue) Short run profit maximization: mr and mc curves determine maximum quantity. Monopolists find the correct price by finding where the demand is there on the x axis: no supply curve, competition and monopoly compared. Why are monopolies so rare: when monopolies exist they earn big profits which attracts competitors #snakes. Oligopolies, which are a few big firms, are more common. Entry barriers: any barrier to the entry of new firms into an industry (natural or created, natural entry barriers.