Monopoly Flashcards
1
Q
Monopoly
A
Only producer of a good that has no close substitutes
Market Power - monopolist gas market power, so they change output and cost
2
Q
Monopolist demand curve
A
Same as market demand curve
Downward sloping
3
Q
Individual Perfectly Competitive Producer market demand curve
A
Horizontal
4
Q
Monopoly profit-maximizing
A
MR = MC and where it intersects at demand curve
P > MR = MC
5
Q
Perfectly Competitive Firms profit-maximizing quantity of output
A
P = MC
6
Q
Price Discrimination
A
Charging different prices to different customers
—> is profitable when consumers are willing to pay lot are charged without driving others ~~> perfect price discrimination (prolly never possible)
7
Q
Common techniques for price discrimination
A
- Advance purchase restrictions
- Volume discounts
- Two-part tariffs
