ECON 1050 Lecture : Monopoly Characteristics
2 Apr 2012
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Monopoly: market with two key features: no close substitutes exist, one supplier is protected from competition by entry barriers, natural barriers to entry. Single-price monopoly firm must sell each unit of its output for the same price to all customers. Monopoly is a price setter opposite of perfect competition; price taker: reason is that demand = market demand, p = qd, marginal revenue = change in total revenue from a one-unit increase in. Revenue total revenue = price x quantity sold. The marginal revenue curve, mr, passes through the red dot midway between 2 and 3. Mr < p at every output level quantity sold. Price goes from to lose in revenue per unit that would have been sold for. Gain per extra unit sold total revenue increases by : marginal revenue. Marginal revenue and elasticity elastic demand: p causes tr inelastic demand: p causes tr: positive mr, negative mr, mr = 0.
