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    Figure 14-1: Average and Marginal Revenue For A Competitive Firm

    Uploaded by

    Lionel Carlos
    The document contains 6 figures that illustrate concepts related to monopoly pricing and social welfare. Figure 14-1 shows average and marginal revenue curves for a competitive firm. Figure 14-2 shows these curves for a monopolistic firm. Figure 14-3 shows that a monopolist's marginal revenue is below the demand curve. Figure 14-4 shows that a profit-maximizing monopolist will produce where marginal revenue equals marginal cost. Figure 14-5 illustrates the deadweight loss of monopoly due to the monopolist pricing above the competitive level. Figure 14-6 shows that with perfect price discrimination, a monopolist can maximize social welfare.

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    Figure 14-1: Average and Marginal Revenue For A Competitive Firm

    Uploaded by

    Lionel Carlos
    5 views7 pages
    The document contains 6 figures that illustrate concepts related to monopoly pricing and social welfare. Figure 14-1 shows average and marginal revenue curves for a competitive firm. Figure 14-2 shows these curves for a monopolistic firm. Figure 14-3 shows that a monopolist's marginal revenue is below the demand curve. Figure 14-4 shows that a profit-maximizing monopolist will produce where marginal revenue equals marginal cost. Figure 14-5 illustrates the deadweight loss of monopoly due to the monopolist pricing above the competitive level. Figure 14-6 shows that with perfect price discrimination, a monopolist can maximize social welfare.

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    The document contains 6 figures that illustrate concepts related to monopoly pricing and social welfare. Figure 14-1 shows average and marginal revenue curves for a competitive firm. Figure 14-2 shows these curves for a monopolistic firm. Figure 14-3 shows that a monopolist's marginal revenue is below the demand curve. Figure 14-4 shows that a profit-maximizing monopolist will produce where marginal revenue equals marginal cost. Figure 14-5 illustrates the deadweight loss of monopoly due to the monopolist pricing above the competitive level. Figure 14-6 shows that with perfect price discrimination, a monopolist can maximize social welfare.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    5 views7 pages

    Figure 14-1: Average and Marginal Revenue For A Competitive Firm

    Uploaded by

    Lionel Carlos
    The document contains 6 figures that illustrate concepts related to monopoly pricing and social welfare. Figure 14-1 shows average and marginal revenue curves for a competitive firm. Figure 14-2 shows these curves for a monopolistic firm. Figure 14-3 shows that a monopolist's marginal revenue is below the demand curve. Figure 14-4 shows that a profit-maximizing monopolist will produce where marginal revenue equals marginal cost. Figure 14-5 illustrates the deadweight loss of monopoly due to the monopolist pricing above the competitive level. Figure 14-6 shows that with perfect price discrimination, a monopolist can maximize social welfare.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 7

    Figure 14-1: Average and marginal revenue

    for a competitive firm

    Price, p, $ per unit

    Demand curve

    p1

    q+1

    Quantity, q, units per year


    Image by MIT OpenCourseWare.

    11-1

    Figure 14-2: Average and marginal revenue

    for a monopolistic firm

    Price, p, $ per unit

    Demand curve

    p1
    p2

    Q Q+1
    Quantity, Q, units per year
    Image by MIT OpenCourseWare.

    Figure 14-3: Marginal revenue for a

    monopolist

    24

    P, $ per unit
    MR
    0

    12

    Demand

    24
    Q, units per day

    Figure 14-4: Profit maximization for

    a monopolist

    P, $ per unit

    MC
    24

    p = 18

    AC

    AVC

    12
    8
    6

    Demand

    MR
    12

    24
    Q, units per day

    Figure 14-5: Deadweight Loss of Monopoly

    24

    MC
    Demand
    MR

    C = $2

    p, $ per unit

    pm = 18
    pc = 16

    MR = MC = 12

    A = $18
    B = $12

    em
    ec

    E = $4

    D = $60

    Q m = 6 Qc = 8

    12
    Q, Units per day

    24
    Image by MIT OpenCourseWare.

    11-5

    Figure 14-6: Social welfare with perfect

    price discrimination

    P, $ per units

    24

    MC
    A

    em

    18
    16

    ec

    E
    Demand

    MR

    12

    24

    Q, units per day


    Image by MIT OpenCourseWare.

    MIT OpenCourseWare
    http://ocw.mit.edu

    14.01SC Principles of Microeconomics


    Fall 2011

    For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.

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