Module Micro 25 Econ 61 Introduction to Monopoly

What you will learn in this Module: • How a monopolist determines the profitmaximizing

Monopoly Demand MR A Monopolist’s MR curve is below the D curve because the

Profit-maximizing P and Q A monopoly maximizes profit by producing the output level where

Monopoly versus Perfect Competition $ • Monopolies create inefficiency • P > MC Profit

Figure 61. 1 Comparing the Demand Curves of a Perfectly Competitive Producer and a

Table 61. 1 Demand, Total Revenue, and Marginal Revenue for the De Beers Diamond

Figure 61. 2 A Monopolist’s Demand, Total Revenue, and Marginal Revenue Curves Ray and

Figure 61. 3 The Monopolist’s Profit-Maximizing Output and Price Ray and Anderson: Krugman’s Economics

Figure 61. 4 The Monopolist’s Profit Ray and Anderson: Krugman’s Economics for AP, First

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Module Micro: 25 Econ: 61 Introduction to Monopoly KRUGMAN'S MICROECONOMICS for AP* Margaret Ray and David Anderson

What you will learn in this Module: • How a monopolist determines the profitmaximizing price. • How to determine whether a monopoly is earning a profit or a loss. • How the monopoly outcome is different from the long-run outcome in perfect competition.

Monopoly Demand MR A Monopolist’s MR curve is below the D curve because the monopoly must lower price to sell more.

Profit-maximizing P and Q A monopoly maximizes profit by producing the output level where MC = MR (like every firm does!)

Monopoly versus Perfect Competition $ • Monopolies create inefficiency • P > MC Profit = $12 Pm = $14 MC = ATC Pc = $10 MR Qm= 3 D Output

The “Classic” Monopoly Graph