Monopoly - created from Mind Map

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Barriers to Entry

Legal Restrictions

Economies of Scale

Control of Essential Resources: Which

Patents and Invention Incentives

Liscenses and Other Entry Restrictions

One Firm can satisfy market demand at a lower average cost per unit than could two or more firms each operating at smaller rates of outputs.

Singe Seller, No Substitutes, Firm = Industry, Price Maker, and Blocked Entry

Price = AR = D

Profit Maximization

Total Revenue Minus Total Cost

Marginal Revenue Equals Margional Cost

Long Run: P.M.

Monopolist supplies the quanitiy at which total revenue exceeds total cost by the greatest amount.

The profit-Maximizing outputs occurs where marginal revenue equals marginal cost. ^The Golden Rule of Profit Maximization

All the costs need to be covereded or the business will not suceed. If a monopoly is insulated from competition by high barriersthat block new entry, economic profit can persist into the long run.

Efficiency

Productive Efficency: P=Min ATC

Allocative Efficency: P=MC

Monopoly