ECON 1011 Lecture Notes - Lecture 27: Marginal Revenue, Demand Curve, Economic Surplus

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27 Nov 2018
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Monopoly: one seller & large number of buyers, no entry (homogenous goods) (not required) (perfect information) (not required) Slope of tr (a straight line) (therefore, it is a straight horizontal line) This will have twice the slope of the demand curve. It also intersects the x-axis when the tr curve is at its peak. If b is x-axis & q is y-axis: Mr = 12 2q x-intercepts: 12 & 6. Total revenue = p*q (rectangle between pm & qm) Total cost = atc*q (rectangle between atcm & qm) (find pm & qm & atcm by finding where mc intersects with mr curve) Consumer surplus = area between pm & below the demand curve (area above profit) Deadweight loss = triangle area between prc (difference between pm & the point where mc hits mr) & qrc (difference between qm & where mc hits d) Profit = (48 17) * 16 = .

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