Chapter 9 Flashcards
1
Q
Monopoly
A
Single Seller Unique Product (no close substitutes) Impossible Entry
2
Q
Entry Barrier
A
Ownership of a vital resource
Legal Barrier
Economies of Scale
Economies of Scale
3
Q
Price Maker
A
Determines the price
4
Q
? sloping demand curve
A
linear downward
5
Q
Marginal Revenue =
A
a-2bQ
6
Q
Output Level Steps
A
MR = MC determines Q
Use demand curve to determine price level
7
Q
Inelastic Slope
A
high monopoly power
8
Q
elastic Slope
A
low monopoly power
9
Q
Vertical demand
A
monopoly power:infinity
10
Q
Horizontal demand
A
perfect competition
11
Q
Consumer surplus
A
area above price level and below demand curve
12
Q
Producer surplus
A
area below price level and above supply curve
13
Q
Total surplus
A
Consumer surplus + Producer surplus
14
Q
Underproduction
A
Consumer surplus increases, Producer surplus decreases, Deadweight loss incurs
15
Q
Increasing MC for Underproduction
A
price should be intersect of MC and D
