Econ test 4 Review
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12 Terms
Downward/Negative Slope
The shape of the demand curve for monopoly
Horizontal
Shape of the demand curve for a perfectly competitive firm
Marginal Cost
The extra “cost” from additional units of “production”
Characteristics of Monopoly
a. One large single seller
b. Unique Product
c. Barriers to entry/exit
d. Firms demand curve = industry demand curve
e. The firm is a price maker
P x Q
TR=
TFC + (Q x AVC)
TC=
TR-TC
π=
Competing firms enter
Postive Profit Implies:
Competing firms exit
Negative Profit implies
Price Discriminating
Charge different prices to different customers
Non-Price Discriminating
Charge the same price to all customers
Monopolies charge a higher price but produce a lower quantity.
Why are monopolies bad compared to competitive industries?
Note 
Flashcards (105)