ECON 1B03 Lecture Notes - Market Power, Economy Class, Price Discrimination
Shanghaibalcony1234 and 37744 others unlocked
46
ECON 1B03 Full Course Notes
Verified Note
46 documents
Document Summary
The three sources of barriers of entry (that create monopolies: a single firm owns a key resource that no other firm can access or has a close substitute for. Its demand curve is the market demand curve. Note that a perfectly competitive firm has a horizontal demand curve (see chapter 14). *also note that because the demand curve is downward sloping, it has to lower p to increase q sold. Therefore marginal revenue is always lower than price. Profit maximizing monopolists will always choose to produce a level of output such that: *note that the demand curve is essentially an average revenue curve (and can be treated as such). Marginal revenue also always bisects the origin and the x intercept of the average revenue curve. The monopoly charges a price > marginal costs. Legislation to prevent mergers that would make the market less competitive. Government agencies regulate the prices a monopoly may charge.