Textbook Notes (368,794)
Canada (162,165)
York University (12,867)
Economics (1,011)
ECON 1000 (397)
Chapter 13&14

Chapter 13 & 14 - Monopoly & Monopolistic Competition.docx

6 Pages
45 Views
Unlock Document

Department
Economics
Course
ECON 1000
Professor
Ardeshir Noordeh
Semester
Fall

Description
ECON 1000 November 26, 2013 CHAPTER 13: Monopoly • Monopoly: industry that produces a good or service for which no close substitute exists and in which there is one supplier that is protected from competition by a barrier preventing the entry of new firms. o 2 key features:  No close substitutes  Barriers to entry o Types:  Legal (patent, licenses)  Natural (cost based) o Price-setting strategies  Single-price monopoly is a firm that must sell each unit of its output for the same price to all its customers.  Price discrimination is the practice of selling different units of a good or service for different prices Single­Price  Monopoly’s Output & Price Decision • Price and Marginal Revenue o A monopoly is a price setter, not a price taker like a firm in perfect competition. o The reason is that the demand curve for the monopoly’s output is the market demand curve. o To sell a larger output, a monopoly must set a lower price. • Total revenue = price x quantity • Marginal revenue = change in TR from one-unit increase in quantity sold • For single-price monopoly, MR is less than price at each output level  MR Pc. • Compared to perfect competition, monopoly restricts output and charges a higher price. • Efficiency comparison o The demand curve is the MB curve and the competitive market supply curve is the MC curve. o So competitive equilibrium is efficient: MB = MC. ECON 1000
More Less

Related notes for ECON 1000

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit