ECO100Y5 Chapter Notes - Chapter 10: Market Power, Economic Surplus, Marginal Cost

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3 Feb 2013
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ECO100Y5 Full Course Notes
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226: 1 revenue concepts for a monopolist. The shape of a firm"s sr cost curve arises from the conditions of production rather than from the market structure in which the firm operates. As a result, the same forces that lead perfectly competitive firms to have u-shaped cost curves apply equally to monopolists. (everything we saw in chapter 7 applies to all market structures. ) Monopolists face a negatively sloped demand curve. When the monopolist charges the same price for all units sold, its total revenue (tr) is simply equal to the single price times the quantity sold: tr = p x q. Ar = tr/q = p x q/q = p. Since dd shows the price of the product, the dd is also the monopolist"s ar curve. A monopolist"s marginal revenue is less than the price at which it sells its output. A monopolist"s choice of output is mc = mr.

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