EC120 Lecture Notes - Lecture 6: Demand Curve, Price Discrimination, Economic Surplus
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What might create a monopoly?
Β | a. |
a key resource is owned by a single firm. |
Β | b. |
the government gives a single firm the exclusive right to produce a good or service. |
Β | c. |
a single firm can produce output at a lower cost than a larger number of producers. |
Β | d. |
all of the above |
(1) | (2) | (3) | (4) | (5) | (6) | (7) |
Output (Q) | Price per Unit (P) | Total Revenue (TR) | Marginal Revenue (MR) | Total Cost (TC) | Average Total Cost (ATC) | Marginal Cost (MC) |
0 | $10 | $8 | ||||
1 | 9 | 11 | ||||
2 | 8 | 12 | ||||
3 | 7 | 15 | ||||
4 | 6 | 24 | ||||
5 | 5 | 35 | ||||
6 | 4 | 48 |
Does this data represent the revenues and costs of a perfect competitive firm or a firm with some degree of Γ’ΒΒmonopoly powerΓ’ΒΒ? ______________________
How do you know? ________________________________________________
Fill in the blanks in the table above.
How much output should this firm produce to maximize itΓ’ΒΒs profit? _____units. What price should this firm charge for its product? $_____ per unit.
This choice of output and price will lead to an economic profit = $______