ECON 208 Lecture Notes - Marginal Revenue, Demand Curve, Price Discrimination
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ECON 208 Full Course Notes
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For monopolists, marginal revenue is less than price. If the monopolist produces too much, he would need to charge a lower price for. A monopolist faces a downward sloping market demand curve (different from in a perfectly competitive market where they faced a horizontal demand curve) If the monopolist charges the same price for all units sold, its total revenue (tr) is: ^regularily is is (tr = p x q). This is a capital q because he has to think about the whole market quantity, not just his own (market quantity is his own) Marginal revenue (mr) is the revenue resulting from the sale of an additional unit of production: The monopolist must reduce the price to increase its sales- therefore the mr curve is below the demand curve. Mr curve- same intercept and twice the slope of the demand curve. Profit maximizing point is lower than minimum average cost point (?)