U8-Monopoly Barron's

a monopoly is when

a single firm controls the entire industry and there are no close substitutes

the demand and MR curve for a monopoly are

downward sloping

the MR curve for a monopoly is

below the demand curve

the MR curve is below the demand curve because

the monopoly is a price maker and if it produces more, the price of the product decreases

government can create monopoly by

making one firm the only producer or through copyright and patents

resources can create monopolies when

one firm that produces also controls all resources

all monopolies experience

economies of scale

monopolies always produce within

the elastic range of their demand curve

monopolies experience highest revenue when

producing at unit elastic range of demand curve

in monopoly markets, there is always (think allocative and productive efficiency)

deadweight loss

a monopoly is neither

allocatively nor productively efficient

a monopoly is not allocatively efficient because

it always produces less than what society needs

a monopoly is not productively efficient because

demand (price) is always above the ATC curve

deadweight loss is graphed as where?

between the D, MR curve and on the right of profit-maxxing quantity

price discrimination is when

a firm charges the most a customer is willing to pay

What is a condition for effective price discrimination?

Separate markets based on price elasticity of demand

What is a requirement for price discrimination regarding resale?

No resale opportunities

What should price differences not be based on in price discrimination?

Cost differences

What type of firm is necessary for price discrimination to occur?

A price maker

in terms of demand curve is equal to what, in price discrimination...

demand curve is always also the marginal revenue curve

what happens to consumer surplus when price discrimination?

no surplus, all is taken by production firm

natural monopoly is when

one firm supply at lower LRATC than if there were multiple firms

natural monopoly examples

gas company, water company, electricity company, etc

socially optimal pricing is when monopoly is forced to produce at

quantity where MC curve meets Demand curve

fair-pricing is when the monopoly

experiences normal profits, produces quantity where ATC curve meets Demand curve

what is the price of monopoly market?

where vertical line of profit-maxxing quantity meets demand curve

what is operating cost of monopoly market graphically represented as?

below meeting point of ATC curve and price-maxxing quantity line, and left of price-maxxing quantity

when ATC = Demand

productively efficient

when MC = demand

allocatively efficient (socially efficient)