ECO 1104 Lecture Notes - Lecture 12: Takers, Air Canada, Marginal Revenue

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: David Gray

Document Summary

In the market for cable television, i am serviced by rogers, my rate is astronomical, and it increases by far more than the rate of inflation each year. In the market for internet access, i am potentially serviced by rogers, and the offers have very reasonable rates: a difference in attitude as well as economic behavior. New important definitions: reminder that tr = p*q, mr = marginal revenue = increment to tr obtained by selling one more unit of output, mr=marginal revenue, mr = change in tr/ change in q. It is the slope of the tr function: average revenue = re/q = p*q/q=p, revenue per unit sold, see table 14. 1. Critical result, not pre existed these are derived, don"t. In perfectly competitive markets, p=mr always: that is not true in monopolized markets. Interpretation: if the firm sells one more (less) unit of output, tr increases (decrease) by p.