ECON 101 Lecture Notes - Lecture 17: Social Cost, Deadweight Loss, Arbitrage
Document Summary
Monopoly vs. competition: given by market conditions quantity supplied to the market. Monopoly"s have the ability to influence the price of output. Is a sol producer in its market, and can alter the price of its good by adjusting the. Competitive firms are small in relation to the market and take the price of output. A competitive firms demand curve is flat as the firm can sell as much or as little as. A firms marginal revenue is always less than the price of its good due to the. Marginal revenue curve lies below the demand curve, as seen in the curve. Increase in sales effect on total revenue: marginal revenue can even become negative downward sloping demand curve. Output effect: more output sold, q increases, tending to increase total. Price effect: price falls, so p is lower, tending to decrease total revenue revenue. Mr. < mc firms increase production to increase profits.