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ECON 201
Corey Van De Waal

fall remain will 1and P1monopoly underATCfirm the MChas the following effectsfor sameAFCAVCThis allows us to predict that economic Since MC is unchanged Xthesametheprofitsforthefirmundermonopolywillfallprofitsbecause there is an increase in total cost but no associated change in total revenuesLecture 16XDARy a rise in fixed costs ATCATCMCMR1XMonopolyMonopolyChanges in Costs1We have already seen wh1PC P1ofits decreaseWeATCys output falls by less and its priceMCto those fluctuations in a PC industry AVCAFCcosts shifts MC up and to the left so that Xy adjusts from M to N along their marginal usts from R to C along the demand curveng the same demand and the same rise in shifts up and economic pr that under monopoly fluctuations in price and 2XXDARMChas the following effectsincreases to PMCMC1RMRMRand PC2M11XX22XXNN2A rise in variable costs 21should notice though that a rise in variable As in the case of rising fixed costs ATC decreases to Xincreases by less than the PC industry facivariable costsThis allows us to predictoutput will be relatively small when compared It is important to recognize that the monopolrevenue curve whereas the PC industry adjSince MR is steeper than demand the monopolPPC P
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