ECON 101 Chapter Notes - Chapter 2: Market Power, Demand Curve, Economic Surplus
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Monopoly versus competition its good by adjusting the quantity it supplies to the market. Because a monopoly is the sole producer in its market, it can alter the price of. Because a monopoly is the sole producer in its market, its demand curve is the. The market demand curve provides a constraint on a monopoly"s ability to profit from its market power. Monopolist would prefer to charge a high price and sell a large quantity, but the market demand curve makes that impossible. The market demand curve describes the combination of price and quantity that are available to a monopoly firm. By adjusting the quantity produced or the price charged, the monopolist can choose any point on the demand curve, but it cannot choose a point off of it. To increase the amount sold, a monopoly firm must lower the price of. Average revenue always equals the price of the good.
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