ECO100Y5 Chapter Notes - Chapter 10: Marginal Revenue, Profit Maximization, Average Variable Cost

• School: UTM
• Department: Economics
• Course: ECO100Y5
• Professor: Michael H O

Document Summary

A single price monopoly a monopolist is the sole producer of the product that it sells, the demand curve it faces is simply the market demand curve for that product. Average revenue: when the monopolist charges the same price for all units sold, it"s tr is simplu equal to the single price times the quantity sold: Tr = p x q since average revenue is total revenue divided by the quantity, it follows that average revenue is equal to the price: Ar = tr/q = (p x q)/q = p and since the demand curve shows the price of the product, it follows that the demand curve is also the monopolist"s average revenue curve. Thus the monopolist"s mr curve is below its demand curve: read on page 227-228 and look at figure 10-1. Sothe produce lower levels and charge higher than marginal cost therefore, more economic surplus could be generated if the monopolist increases the level of output.