微观经济学()垄断课件.ppt

* The most important concept in this chapter is the relation between MR and P for a monopolist. Everything else in the chapter – markup pricing, economic profit, deadweight loss, public policy response, etc. – these all flow from the relationship between P and MR. This relationship is also important because P MR for firms with market power in other market structures, such as monopolistically competitive firms. Since P MR for these firms, many of the same issues arise. For most students, the relationship between P and MR is the most challenging topic in the chapter. This PowerPoint includes an Active Learning exercise requiring students to calculate marginal revenue at various quantities from a demand schedule, so students will see for themselves that MR P. The PowerPoint also includes careful explanation on the relation between MR and P. I hope your students find it helpful. Another tricky concept for some students is identifying the monopolist’s price on a graph. Students generally can find the profit-maximizing quantity, where the MR and MC curves intersect. But they sometimes forget to go up to the D curve to find the highest price the market will bear at that quantity. * * Most students already know that monopoly means the firm is the only seller of its product. But the definition here has another very important part: In order for the firm to be considered a monopoly, the product it sells must have no close substitutes available from other firms. * * The horizontal axis of the graph measures number of homes provided electricity. The vertical axis measures the average total cost of providing electricity per home. * * A competitive firm is a price-taker, can sell as much as it wants at the market price. In effect, the competitive firm sells a product for which there are many perfect substitutes, so demand for its product is perfectly elastic; if it raises its price above the market price, demand for its product falls to zero. The rel