(Microeconomics)
^^Monopoly:^^
Entering and exiting the market due to this monopoly is hard as there are high barriers to entry. Monopoly firms tend to be price makers, as they set the price they want.
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In the elastic range of the demand curve, a profit maximising monopoly will be produced. The marginal revenue is positive, as the prices are lowered by monopolists, which increases profits and leads to an increase in total revenue.
In the inelastic range, monopolists will not produce goods and services. The marginal revenue is negative here, a decrease in total revenue leads to a decrease in price.
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On a graph, a monopoly can be illustrated through both the firm and the indignity, as it has control of the total production of goods and services. This is known as the price maker, which is why the monopoly graph is shared between firm and industry.
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Is a selling strategy which prices the same good at different prices based on what the producer believes the consumers will pay for this product. The prices differ based on what the consumers are willing to pay.
An example of this would be airline tickets which are strategically priced differently. However, this would not be effective as consumers will understand that they have been paying a higher price than others.
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Price discrimination works most efficiently if these conditions are met:
Different price elasticities are the basis to creating different markets for consumers. Elastic demand goods provide consumers with the ability to use substitutes. Goods with inelastic demand have less substitutes to consumers.
{{TIP: this graph will be included in the AP exam since it has flat MC, ATC, and LRATC curves which makes it easier to identity where the deadweight loss is along with other factors. This is seen in Fig. 5{{
This graph has a few unique features, which are:
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This monopoly is formed when there are high start-up costs leading to larger economies of scale, which leaves only one firm in charge of producing goods and services to this territory. There are larger entry and exit costs in the market that lead to this. Only one farm is capable of serving the market at a time.
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