ECON 2102 Final Exam Ch 10,11-12,16

characteristics
-one firm only, the firm is the industry
-product has no or few close substitutes
-extremely high barriers to entry
implications
-the demand curve for the firms' demand curve is downward sloping. more specifically, the demand curve facing the monopolist is the market demand curve
-monopolist has control over price, but the price change affects the quantity demanded of the firm's products; to sell more the monopolist must lower the price

1. for monopoly, P > MR at all levels of output in other words, the demand curve facing the monopolist is above the MR curve
2. for monopoly, TR curve is inverse U shaped

-TR and TC Method
-MR and MC Method

-choose Q* such that the distance between TR curve and TC curve is at the greatest

-choose Q* such that the slope of TR curve is equal to the slope of the total cost curve
-i.e. choose Q* such that MR=MC
-charge P* (price) from the demand curve

-a monopolist will select an output quantity that corresponds to the profit maximization rules:
-if MR>MC, increase output
-if MR<MC, decrease output
-if MR=MC, maintain current output