MGEA02H3 Lecture : Lecture notes week 8

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA02H3
• Professor: Gordon Cleveland

Document Summary

What are the results: where does monopoly come from; what conditions are necessary; what are the public policy responses, excise tax on a monopoly. E single seller faces entire market demand curve (price maker, not price taker) To pc firm, p was a constant (price taker) To monopolist, p is a choice variable, so we must treat p as a function of q. So, mr = [(dp / dq) x q] + [(dq / dq) x p] or mr = p + q (dp / dq) For a linear demand curve p = a b q, Mr = (a b q) + (q [-b]) = a 2 b q. So mr has the same intercept and twice the slope of the linear demand curve. So, total revenue = tr = p x q = 100q - . 02q2. Marginal revenue = dtr / dq = 100 - . 04q (the rate at which total revenue is changing as output increases)