Dderf Composition

Dderf

Spiel VII M t

THE MONOPOLY

Industry equilibrium – REPETITION lecture VI

Elizabeth

20

G

e source d

Closed circuit

16

value

12

b

8

N

a

some

A

demand

0 zero 100 200 300 500 500 six hundred 700 800

Quantity

The minimal value and arret point – repetition spiel V

G

MC

AC AVC

G = MR

Pmin Pshutdown Qshut

Qmin

QE

Q

Demand and Marginal Earnings Faced with a Competitive Firm - replication Price $ per bushel

Firm

Price $ every bushel

Sector

$4

m

$4

G 100 two hundred

Output (bushels)

100

End result (millions of bushels)

TC, TR

TR

TC

QD/G - b k breakeven points i t

0 P, AIR CONDITIONING UNIT AC

Q

P sama dengan MR

Failures

QD

Earnings

QG

Failures

Q

Monopoly

 Monopoly 1) One particular seller - many purchasers ) sumado a y 2)One product (no good substitutes) 3)Barriers to entry

Monopoly

A monopoly my spouse and i a single provider t a l is definitely i t li to market

This kind of firm mother choose to develop at an fi m might p z ce virtually any point available demand curve

Technical Barriers to Access

   

Economies of scale Elizabeth i farrenheit l Significant entry costs Information benefits Ownership of the unique useful resource

Legal Boundaries to Entrance g y

 

Patents Distinctive franchises

Monopolist is limited by demand plus the production costs. costs The need is influenced by: The product value (p), which is set by the monopolist Non-price Non selling price factors

Queen = Qd[(-)p, (+)M, (-)pk,... ]

The necessity function (non-price factors will be constant)

Q = QD(p)

The inverse form:

l = p(Q) p( ) Total revenue function: TR = p(Q) * Q

Marginal income function: MISTER M we l n ti

= dTR(Q) as well as dQ

SIGNIFICANT:

Total earnings function (in case of monopoly market):

TR sama dengan p(Q) 2. Q

Nevertheless no: TR = Q(p) * s (p) Example:

Q = 50 – 10 *p → g = 5 – 0 1 *Q 0, 1

then th TR sama dengan p(Q) SIMPLY NO: TR

5. Q = (5-0, 1*Q) * Q (5 zero 1*Q)

sama dengan (50 – 10*p) 2. p 15 p) = dTR(Q) as well as dQ

The function of marginal earnings: MR

Monopoly

 The monopolist is a supply area of supply-side the market and has complete control over the total amount offered available for sale sale.  Profits will be maximized at the level of end result where limited revenue equals marginal price.

Monopoly

 Finding Minor Revenue

Because the sole producer, the monopolist works with the industry demand to ascertain output and price. Believe a firm with demand:  P=6-Q

Total, Marginal, and Average Revenue

Price P i G Quantity Q tit Q Total Revenue R L Marginal Income R MR Average Earnings R KVADRATMETER

$6 your five 4 3 2 1

0 you 2 3 4 a few

$0 a few 8 on the lookout for 8 your five

--$5 3 1 -1 -3

--$5 4 three or more 2 one particular

Average and Marginal Earnings

$ per unit from it f end result

7 six 5 four 3 2 1 zero

Marginal Income

Average Revenue (Demand)

one particular

2

several

4

five

6

several Output

Monopoly

 Findings 1)To enhance sales the price must show up ) g 2)MR < P 3)Compared to perfect competition  Zero change in cost to change product sales  MISTER = S

Monopoly

 Monopolist's Output Decision Monopolist s 1)Profits maximized with the output ) p level where MISTER = MC 2)Cost capabilities are the same 2)C t farreneheit ti th  (Q )  TR (Q )  TC (Q )   as well as  Queen   TR as well as  Queen   TC as well as  Q  zero  MC  MR or MC  MR

Maximizing Revenue When Limited g g Revenue Equals Marginal Price The Monopolist's Output Decision

 At output levels below MR = MC the decline in revenue is greater than the decrease in cost (MR > MC) MC).  In output levels above MR = MC the increase in cost is greater than the decrease in revenue (MR < MC)

Maximizing Earnings When Little q g Revenue Equals Marginal Expense $ per unit of it f end result

MC P1 P* P2

Lost profit

AC

D = FLADEM?L MR Q1 Q* Q2

Lost earnings

Quantity

Monopoly

The Monopolist's Output Decision

 A good example

Cost

 TC ( Q )  60  Queen

2

C MC   2Q Q

Monopoly

The Monopolist's Output Decision

 The

Demand  P ( Q )  45  Q

2

TR ( Q )  P ( Q ) Q  40 Queen  Queen  TR MR   forty five  2 Q Q

Monopoly

The Monopolist's End result Decision

 An Example

MISTER  MC or 40  2Q  2Q Q  10...