MGCR 293 Lecture Notes - Lecture 8: Monopolistic Competition, Wage, Isocost

• School: McGill University
• Department: Management Core
• Course: MGCR 293
• Professor: Kamal Salmasi

Document Summary

M an a ge ri al e c o n o m ics. In this chapter we expand on the studying of market structure. Last chapter we were introduced to the concept of perfect competition. This chapter will focus on both monopoly and monopolistic competition. A monopolist has immediate influence on the output and the price of that product in the market. The monopolist has complete control of the supply curve. A monopoly is characterized by products that have: no close substitute, one supplier, barriers to entry. Like many other market structures, the monopolist will produce where: Since the monopolist can set the price of the product, it will sell at a price of: This is a very simple strategy that guarantees that the price is higher than the average cost. It is often adopted by small businesses that cannot determine the maximum price.