Monopoly
The only supplier a good without close substitutes
Prive setter/maker (not taker)
·
Tl-max by MR M2
(closing q)
Monopoly faces
downward sloping demand curve
=
·
*
a
P
P
19
D
Monop
competitive firm
&
Q ↑ has 2 effects on total revenue (TR P Q)
=
Total differential
·
>
-
MR
=
p+
=
dTR
:
=
(
.
P dQ + &P Q
.
.
output priceffect
(MHPMRPo
a
e
.
g
.
An inverse demand function
find MR
=
TR P Q
=
=
.
MR=
MR
24-2Q 2
-
+a
=
P(HE)
MR
0
MR
>
0
p+
=
as
Ee
a
E
as
+
=
<
MR curve is twice
=
**
I
=
P
24
24Q-Q2
P
=
124-Q
?
=
MR + P
:
Steeply sloped as
demand curve
as
(P
*
-
-
210
(Perfect elastic)
Cunit elastic
(inelastic
D
1297124
Q