ECON 203 Lecture 14: Chapter 14, 15
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Department
Economics
Course
ECON 203
Professor
Laura Razzolini
Semester
Winter

Description
Chapter 14, 15 Sunday, March 26, 2017 8:13 PM TR: Total Revenue AR: Average Revenue MR: Marginal Revenue (change in TR from selling one more unit) The main cause of monopolies are barriers that keep other firms from entering the market Reasons 1. A firm owns a key resource (diamond mines) 2. Gov. gives one firm the excluseive right (patent, copyright) 3. Natural Monopoly a single firm can produce the total market quantity for less than several firms. Increasing Q has two effects on revenue: Output effect: higher output raises revenue Price effect: lower price reduces revenue Profit is maximized whenM R=MC Competitive firms take price as given Monopolies are price makers Price discrimination: selling the same good at different prices to different buyers. WTP: Willingness to pay is the characteristic used in price discrimination. Antitrust Laws: Gov sets market prics
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