Monopoly

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Monopoly

  1. 1. Monopoly
  2. 2. Assumptions
  3. 3. Barriers to entry
  4. 4. Barriers to entry
  5. 5. Barriers to entry
  6. 6. Natural Monopoly LRAC
  7. 7. Barriers to entry
  8. 8. Barriers to entry
  9. 9. Barriers to entry
  10. 10. Barriers to entry
  11. 11. Demand Curve in Monopoly
  12. 12. Profits in monopoly
  13. 13. Loss in monopoly
  14. 14. Revenue maximization in MonopolyInstead of Profit maximization (MC=MR), amonopolist may choose revenue maximization(MR=0).Revenue: Output (quantity) x cost of eachoutputProfit: Total revenue- total costsProfit maximization: Profit maximization occurswhen MC = MR (Marginal cost = marginalrevenue)Revenue maximization: Revenue maximizationoccurs when MR=0 (Marginal revenue = 0)
  15. 15. Efficiency in Monopoly
  16. 16. Advantages of Monopoly Advantages of Monopoly Economies Investment of scale in R & D
  17. 17. Economies of scale
  18. 18. Investment in R & D
  19. 19. Comparison of price and output in monopoly andperfect competition
  20. 20. Conclusion Productively Charge higher Exercise anti-A monopoly and prices and competitive is: allocatively produce behaviour. inefficient. lower output.

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