Monopoly Flashcards
1
Q
Characteristics of monopoly (4)
A
One firm
High barriers to enter/exit
Product differentiation
Secrecy
2
Q
Revenue curves (3+)
A
Price inelastic becuase only one firm dominates = downward sloping demand
Either set price or output not both
AR and MR = falling = to sell an extra unit prices must fall so revenue falls
3
Q
Who assumes what
A
Neoclassical = profit maximisers
4
Q
What in LR + SR
A
Abnormal profits can be made in both LR + SR = high barriers
5
Q
Points to note (3+)
A
The monopolist will only produce where demand is elastic
The left of the revenue curve is a price elastic demand
A monopolist would not produce where demand is inelastic otherwise revenue would fall
