61: Intro To Monopoly Flashcards
1
Q
why does marginal revenue not equal price for monopolists?
A
quantity effect and price effect
2
Q
quantity effect
A
increasing the number sold by one unit increases the total revenue by the amount it is sold for
3
Q
price effect
A
in order to sell the last unit, the monopolists must cut the market price for all units sold, decreasing the total revenue
4
Q
differences between monopolists and perfectly competitive firms? (3)
A
1) produce smaller quantity
2) charges higher price
3) can earn a profit in the long run
