Short-run Equilibrium Under Monopoly: Total approach Pricing and output under monopoly follow basically the same rules as under competition MR=MC Major difference between competition and monopoly lies in the shape of the total revenue curve( to sell more units the monopolists must lower price) Monopolist will maximize profits where the difference between tr and tc is maximum Greatest difference occurs where the slopes of tr and TC are the same since the slopes are the same marginal revenue equals marginal cost 16
16 Short-run Equilibrium Under Monopoly: Total approach Pricing and output under monopoly follow basically the same rules as under competition: MR=MC Major difference between competition and monopoly lies in the shape of the total revenue curve (to sell more units the monopolists must lower price) Monopolist will maximize profits where the difference between TR and TC is maximum Greatest difference occurs where the slopes of TR and TC are the same, since the slopes are the same marginal revenue equals marginal cost
Monopolists Short Run Profit Maximization- Total Approach TC Breakeven s Profit Maximizing Point (收支相抵点) Breakeven TR Greatest difference occurs where the slopes of TR and Tc are the same, since the slopes are the same: MR=MC
17 Monopolists Short Run Profit Maximization- Total Approach TC Breakeven Profit Maximizing Point 0 Q* Greatest difference occurs where the slopes of TR and TC are the same, since the slopes are the same: MR=MC FC Breakeven (收支相抵点 ) $ TR Q
Short-run Equilibrium Under Monopoly Marginal approach marginal approach more useful firm will produce where marginal revenue(Mr)=marginal cost(MC) profit per unit equals P-SAC
18 Short-run Equilibrium Under Monopoly: Marginal approach marginal approach more useful firm will produce where marginal revenue (MR)=marginal cost (MC) profit per unit equals P-SAC
Short-run Equilibrium Under monopoly Marginal approach s per unit of output SMC profit per unit(P-SAC) SAc Profit>0 DEAR Profit<o IMR Quantity
19 Short-run Equilibrium Under Monopoly: Marginal approach Profit< 0 P 1 Q 1 Profit>0 SMC SAC Quantity $ per unit of output D = AR MR P* Q* P 2 Q 2 profit per unit (P-SAC)
Short-run Equilibrium Under Monopoly s per unit of P>SAC→>元>0 output excess profit SMC SAc DE AR SAVC MR Quantity
20 Short-run Equilibrium Under Monopoly SMC SAVC Quantity $ per unit of output D = AR MR P* Q* SAC P>SAC→π>0 (excess profit)