1. Characteristics of a Monopoly?
    • Single Seller
    • Differentiated Products (No Substitutes)
    • Difficult to Enter/Exit
    • Price Seeker
  2. A firm becomes a Monopoly because of what reasons? (4)
    • Patent
    • Economies of Scale
    • Government Franchise
    • Control of Raw Material
  3. Marginal Revenue =
    Change in Total Revenue/Change in Output
  4. Average Revenue =
    Total Revenue/Total Output
  5. Maximizing Profits
    • TR > TC
    • AR >ATC
    • P >ATC
  6. Break-even Point
    • TR = TC
    • AR = ATC
    • P = ATC
  7. Minimizing Losses
    • TC > TR > TVC
    • ATC > AR > AVC
  8. Shut-down point
    • TR = TVC
    • AR = AVC
    • P = AVC
  9. Can a monopoly have profits in the long-run?
    Yes, as long as it retains a monopoly with no competitors
  10. First-degree Price Descrimination
    Each customer is charged the maximum possible
  11. Second-degree Price Descrimination
    customers are divided into groups and charged the same price per unit based on the quantity purchased
  12. Third-degree Price Descrimination
    customers are divided into different groups based on their elasticity of demand for the product
  13. Why is a Monopoly undesireable? (3)
    • Produces less and charges higher prices
    • All consumers do not pay the same price
    • Does not produce at its lowest average cost point in the long run
  14. Arbitrage
    Simultaneous purchases and sales of currencies in different markets
  15. Monopoly
    A single seller where the firm is the same as the industry
  16. Price Maker
    is a frim that faces a downward sloping demand curve
  17. Price Descrimination
    allows monopolist to increase profits by charging buyers different prices instead of a single price
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