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1. How does a monopolist determine its profit-maximizing price and quantity?

2. How does a monopoly determine whether it is earning a profit or a loss?

3. What are the effects of the difference between perfect competition and monopoly on society’s welfare?

4. How do policy-makers address the problems posed by monopoly?

5. What is price discrimination and what conditions must be present for it to occur?

6. Why is price discrimination so prevalent in imperfect competition?

7. How is government regulation used to prevent inefficiency in the case of natural monopoly?

8. What are the pros and cons of using marginal cost pricing and average cost pricing to regulate prices in natural monopolies?

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Define (using graphs where appropriate) the characteristics of imperfectly competitive markets and inefficiency.

Explain (using graphs where appropriate) equilibrium, firm decision making, consumer surplus, producer surplus, profit (loss), and deadweight loss in imperfectly competitive markets and why prices in imperfectly competitive markets cannot be relied on to coordinate the actions of all possible market participants and can lead to inefficient outputs.

Calculate (using data from a graph or table as appropriate) areas of consumer surplus, producer surplus, profit (loss), and deadweight loss in imperfectly competitive markets.

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Even with a common goal of profit-maximization, market structure constrains and influences prices, output, and efficiency.

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Imperfectly competitive markets include monopoly, oligopoly, and monopolistic competition in product markets and monopsony in factor markets.

In imperfectly competitive output markets and assuming all else is constant, a firm must lower price to sell additional units.

In imperfectly competitive markets, consumers and producers respond to prices that are above the marginal costs of production and/or marginal benefits of consumption (i.e., price is greater than marginal cost in an inefficient market).

Incentives to enter an industry may be mitigated by barriers to entry. Barriers to entry—such as high fixed/start-up costs, legal barriers to entry, and exclusive ownership of key resources—can sustain imperfectly competitive market structures.

A monopoly exists because of barriers to entry.

In a monopoly, equilibrium (profit-maximizing) quantity is determined by equating marginal revenue (MR) to marginal cost (MC). The price charged is greater than the marginal cost.

In a natural monopoly, long-run economies of scale for a single firm exist throughout the entire effective demand of its product.

A firm with market power can engage in price discrimination to increase its profits or capture additional consumer surplus under certain conditions.

With perfect price discrimination, a monopolist produces the quantity where price equals marginal cost (just as a competitive market would) but extracts all economic surplus associated with its product and eliminates all deadweight loss.

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APMic Unit 4 Lesson 1 - Monopoly and Price Discrimination Flashcards | Quizlet

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Start studying APMic Unit 4 Lesson 1 - Monopoly and Price Discrimination. Learn vocabulary, terms, and more with flashcards, games, and other study tools.

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Most of us are well-acquainted with the idea of a monopoly: when there is only one firm prevailing in a particular industry. However, from a regulatory view, monopoly power exists when a single firm controls 25% or more of a particular market. For example, De Beers is known to have a monopoly in the diamond industry. Natural monopolies are a specific variant of this situation.

In the United States, the Federal Trade Commission ( FTC) is in charge of regulating monopolies.

Natural monopolies occur when it makes the most sense, efficiency-wise, for only one firm to exist in a given sector. This generally happens when the industry involved has extremely high fixed costs. (Fixed costs are those that remain the same regardless of the number of goods or services produced. Rent, for example, is a fixed cost.) Natural monopolies are especially common when a good or service requires very large-scale infrastructure to function.

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Natural Monopolies | Intelligent Economist

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Most of us are well-acquainted with the idea of a monopoly: when there is only one firm prevailing in a particular industry. However, from a regulatory view, monopoly power exists when a single firm controls 25% or more of a particular market. For example, De Beers is known to have a monopoly in the diamond industry.

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Marginal Revenue in Perfect Competition & Monopoly

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Micro 4.1 Monopoly Demand and MR: Econ Concepts in 60 Seconds monopoly graph

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Mr. Clifford's 60 second explanation why the MR curve is less than the demand for all imperfectly competitive firms (except for price discriminating monopolies). Keep in mind that a monopoly must lower the price of all units to sell more so the additional revenue they get is the price minus the revenue they could have made by selling previous units at a higher price.

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Micro 4.3 Monopoly Dead Weight Loss Review: AP Microeconomics

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Mr. Clifford's 60 second explanation of how to identify the consumer and producer surplus on the monopoly graph. Notice that monopolies charge a higher price and produce a lower output than perfectly competitive markets. Since monopolies are inefficient they also have dead weight loss.

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Micro 4.4 Elastic and Inelastic Range of Demand for Monopolies- ACDC Econ

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Mr. Clifford's 60 second explanation of how to identify the elastic and inelastic range of the demand curve for a monopoly. When MR is positive the demand is elastic and when it is negative the demand is inelastic. If you don't remember the total revenue test, watch that video first.

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Micro 4.5 Socially Optimal and Fair Return for Monopolies

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Mr. Clifford's 60 second explanation of regulating monopolies. The government can regulate at socially optimal quantity (D = MC) to get them to produce the allocatively efficient output or they can get them to produce at fair return (D=ATC) where they make no economic profit.

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Micro 4.6 Lump Sum and Per Unit: Econ Concepts in 60 Seconds

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Mr. Clifford's 60 second explanation of the difference between lump sum and per unit subsidies. Remember, lump sum affects only fixed costs so MC won't shift. A per unit subsidy will affect MC and therefore output. Please keep in mind that these clips are not designed to teach you the key concepts.

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Monopoly Graph Review and Practice- Micro 4.7

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Monopoly is the Way to Go: AP Econ Music Video 2016

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Maximizing Profits Under Monopoly | Microeconomics Videos

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AIDS has killed more than 36 million people worldwide. There are drugs available to treat AIDS, but the price of one pill is incredibly high in the U.S.

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Hi all
Can you just check the practice questions (the Second one)for "office hours: caluclating monopoly profit'
P=1200-5q
Fixed cost is 1000q
MC 300Q
The profit or total profit is 39500
this is what i get becuase 1) slope is 1200-10q
2)quatinit= 1200-10q=300
1200-300= 10q
90=q
3)price is P=1200-5q
P= 1200-450
P=750
4) total revenue = qxp=750x90=67500
total cost= fixed cost+marginal costx variable cost = 1000+ 300x90= 28000
TR-TC=TP= 67500-28000=39500

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Office Hours: Calculating Monopoly Profit | Marginal Revolution University

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Hi all Can you just check the practice questions (the Second one)for "office hours: caluclating monopoly profit' P=1200-5q Fixed cost is 1000q MC 300Q The profit or total profit is 39500 this is what i get becuase 1) slope is 1200-10q 2)quatinit= 1200-10q=300 1200-300= 10q 90=q 3)price is P=1200-5q P= 1200-450 P=750 4) total revenue = qxp=750x90=67500 total cost= fixed cost+marginal costx variable cost = 1000+ 300x90= 28000 TR-TC=TP= 67500-28000=39500

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One could be political-legal which includes all regulations and licenses and restrictions applied to various stages in the production and distribution process. These regulations and restrictions may be motivated by safety reasons, by intentions to protect local industries or other special interest groups. Examples are tariffs, high initial capital requirements, patents.
A second type may have to do with the inevitably unique nature of the value which is being marketed. It is impossible to become a supplier of 19th century symbolist painting because you cannot go back in the 19th century to paint; or to become a producer of Bordeaux wine if the demand is for wine that actually comes from Bordeaux and there is only so much land around Bordeaux to grow grapes.
A third type has to do with the nature of the production process and distribution for a particular product. In the car manufacturing industry there are high startup costs. You need to pool a large amount of investments first. There may be economies of scale which means your business becomes profitable only after you become quite big. Or there may be network effects which favor existing suppliers. Traders go to ebay simply because is larger than a contester trying to establish a new trading place.

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The Monopoly Markup | Microeconomics Videos

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One could be political-legal which includes all regulations and licenses and restrictions applied to various stages in the production and distribution process. These regulations and restrictions may be motivated by safety reasons, by intentions to protect local industries or other special interest groups. Examples are tariffs, high initial capital requirements, patents.

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AP Micro: PRD (BI), PRD‑3 (EU)

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About this unit

This unit introduces students to imperfectly competitive market structures: monopoly, monopolistic competition, and oligopoly. Topics include firm behavior and efficiency in imperfectly competitive settings and game theory.

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Imperfect competition | AP®︎/College Microeconomics | Khan Academy

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AP Micro: PRD (BI), PRD‑3 (EU)

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About this unit

This unit introduces students to imperfectly competitive market structures: monopoly, monopolistic competition, and oligopoly. Topics include firm behavior and efficiency in imperfectly competitive settings and game theory.

AP® is a registered trademark of the College Board, which has not reviewed this resource.

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Imperfect competition | AP®︎/College Microeconomics | Khan Academy

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AP Micro: PRD (BI), PRD‑3 (EU)

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About this unit

This unit introduces students to imperfectly competitive market structures: monopoly, monopolistic competition, and oligopoly. Topics include firm behavior and efficiency in imperfectly competitive settings and game theory.

AP® is a registered trademark of the College Board, which has not reviewed this resource.

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Imperfect competition | AP®︎/College Microeconomics | Khan Academy

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Introduction to Price Discrimination | Microeconomics Videos

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Price discrimination is common: movie theaters charge seniors less money than they charge young adults. Computer software companies sell to businesses and students at different rates, often offering

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Regulating Monopolies (Socially Optimal and Fair Return)- Micro Topic 6.4

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AP Microeconomics: 4.1-4.2 Imperfectly Competitive Markets and Monopoly