ECN 104 Chapter Notes - Chapter 15: Deadweight Loss, Price Discrimination, Competitive Equilibrium

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A monopoly firm has market power, the ability to influence the market price of the produce it sells. A competitive firm has no market power: the main cause of monopolies is barriers to entry other firms, three sources of barriers to entry: cannot enter the market. A single firm owns a key resource (e. g. , debeers owns most of the world"s diamond mines) The government gives a single firm the exclusive right to produce the good. (e. g. , patents, copyright laws) The profit-maximizing q is where mr = mc: 2. Find p from the demand curve at this q: as with a competitive firm, the monopolist"s profit equals (p atc) x, the monopolist"s profit. Q: a monopoly does not have a supply curve, a competitive firm. Has a supply curve that shows how its q depends on p: a monopoly firm. Q does not depend on p, rather q and p are jointly determined by mc, mr, and the demand curve.

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