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5 Cards in this Set
- Front
- Back
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monopoly
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A firm that has market power and no close substitutes.
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Three sources of barriers to free entry
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1. A single source owns the resources
2. The government gives a single firm the exlusive right to produce that good 3. Natural monopoly - A firm can produce the entire marker Q at a lower cost than other firms |
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Demand curve in a monopoly
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Since it is the only seller, it is the market demand curve. MR does not equal P.
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Maximizing profit in a monopoly
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Quantity is determined by MR=MC, and price is determined by raising MR=MC to the demand curve
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Profit for a monopoly
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area between demand curve and ATC. (P - ATC) x Q
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