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Terms in this set (73)

Assume: patents, economies of scale, and resource ownership secure monopoly; no government regulation; firm charges the same price for all units of output
-the pure monopolist is the industry and its demand curve is the market demand curve
-because the market demand curve is nor perfectly elastic the monopolist demand curve is down-sloping
-marginal revenue is less than the price for every output but the first
-a monopolist can only increase sales by charging a lower price
-each additional unit of output sold increases TR by an amount equal to its own price minus the sum of the price cuts that apply to all prior units of output
-monopolist is a price maker- all imperfect competitors face a downward sloping demand curve
-firms with downward sloping demand curves are price makers
-monopolist sets prices in the elastic region of the demand curve
-when demand is elastic: price increases and TR decreases
-a monopolist will never choose a price quantity combo that causes TR to decrease (MR is negative)
-he profit maximizing monopolist will always want to avoid the inelastic segment of D curve in favor of price in the elastic region
-can preform a TR test
-monopolists want to operate where mc=mr
-MR is not constant as input increases
-D does not equal MR, but D=P
-Why doesnt D=MR? - You must lower price of not only the next level of output, but also the preceding ones
When interpreting a graph, to find the price, find where MC=MR, then go up to Demand and then go over to find price level