ECON 101 Lecture Notes - Lecture 15: Economic Surplus, Marginal Revenue, Demand Curve
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ECON 101 Full Course Notes
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Monopoly: sole supplier of a good that has no close substitutes supply and demand model: only true for perfect competition. Atc falls as output increases; so, larger companies are more pro table and drive out smaller companies high initial set-up costs > more di cult to enter the industry b/c needs a. How a monopoly maximizes pro ts: monopolists" demand curve and marginal rev. Monopolist"s demand curve = the market demand curve monopoly is the entire market downward sloping demand curve to sell more, they most lower price unlike in perf comp, marginal rev does not equal price. Quantity e ect: total revenue increases by selling an additional units. Price e ect: total revenue decreases b/c to sell an additional unit, most lower price on all units sold. Marginal rev is always less than price due to price e ect so marginal rev curve is less than demand curve (b/c height of demand curve = price)