ECO101H1 Lecture Notes - Lecture 10: Demand Curve, Profit Maximization, Natural Monopoly
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ECO101H1 Full Course Notes
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A monopoly is a firm that is the sole seller of a product with no close substitutes. The key difference from perfect competition: market power: the ability to influence the market price of the product it sells. The main cause of monopoly is barriers to entry- other first cannot enter. Atc is lower if one firms services all 1000 homes than if two firms each service 500 homes. In a competitive market, the market demand curve slopes downward. But the demand curve for any individual form"s product is horizontal at the market price. The firm can increase q without lowering p, so mr = p for the competitive firm. A monopolist is the only seller, so it faces the market demand cure. The sell a larger q, the firm must reduce the price p. Concepts app 1: a monopoly revenue common grounds is the only sellers of cappuccinos in town. The table shows the market demand for cappuccinos.