Monopoly Flashcards
1
Q
Monopoly
A
One firm in the market
Price maker
Monopoly output is market output
Monopoly demand curve is market demand curve
Profit Max - MR = MC
2
Q
MR & MC
A
3
Q
Profit
A
TR - TC
4
Q
Proft max condition
A
5
Q
Product rule
A
6
Q
Elasticity of demand
A
7
Q
MR in terms of elasticity
A
8
Q
MR> 0 demand is…
MR<0 demand is
A
MR>0 elastic
MR<0 inelastic
9
Q
A
10
Q
A
11
Q
A
12
Q
A
13
Q
A
14
Q
Lerner index
A
index of firm market power. Another way to examine how elasticity affects a monopoly price relative to its MC
15
Q
Competitive and market power Lerner index
A
0 for competitive and 1 for market power
18
Q
A
20
Q
A
21
Q
A
21
Q
A
23
Q
Natural monopoly
A
one firm can produce total output of the market at a lower cost than several firms could
24
Q
Gvt actions that create a monopoly
A
License to operate
Rights to be a monopoly
Auctioning
26
Q
A
