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Monopolistic Pricing – the Demand Curve

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How Do Monopolists Set Price with the Demand Curve? A perfectly competitive firm acts as a price taker, so we calculate total revenue taking the given market price and multiplying it by the quantity of output that the firm chooses. A flat perceived demand curve means...

Total Cost and Total Revenue for a Monopolist

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is Total Cost and Total Revenue for a Monopolist?  The total cost curve has its typical shape – total costs rise and the curve grows steeper as output increases. Low levels of output bring in relatively little total revenue, because the quantity is low....

Marginal Revenue and Marginal Cost for a Monopolist

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is Marginal Revenue and Marginal Cost for a Monopolist? In the real world, a monopolist often does not have enough information to analyze its entire total revenues or total costs curves. After all, the firm does not know exactly what would happen if it were to...

Inefficiency of a Monopoly

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

Why is a Monopoly Inefficient? Most people criticize monopolies because they charge too high a price, but what economists object to is that monopolies do not supply enough output to be allocatively efficient. To understand why a monopoly is inefficient, it is useful...

Profit Maximization – Marginal Revenue and Costs

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

Using Marginal Revenue and Marginal Costs to Maximize Profit The approach that we described in the previous section, using total revenue and total cost, is not the only approach to determining the profit maximizing level of output. In this section, we provide an...
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