ECON 1010 Lecture Notes - Lecture 1: Perfect Competition, Monopoly Price, Marginal Revenue
18 Feb 2017
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Document Summary
A type of barrier to entry in the long run economies of scale. In the long run, with more output the firm produces, the lower the cost per unit is. If ecomomies of scale persists through a large-enough range of output, then a single firm will be able to produce for the entire market at a lower cost than would 2 or more firms. Natural monopoly a monopoly from economies of scale. Single-price monopoly a firm that must charge the same price for every unit they sell. A monopoly faces a downward-sloping demand curve which causes a firm to lower the price in order to sell a greater quantity also because it has market power to change the price of the product. Marginal revenue (mr) is less than the price for all increases of output so the mr curve lies below the demand curve.
