MARKETS WITH MARKET POWER - Tufts University
MARKETS WITH MARKET POWER - Tufts University
MARKETS WITH MARKET POWER - Tufts University
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Monopoly<br />
Table 1:<br />
The Monopoly’s Demand Curve & its Total Revenue<br />
the demand curve:<br />
average<br />
revenue = price<br />
at each<br />
quantity ($/bu)<br />
q<br />
quantity<br />
of<br />
output<br />
total revenue (TR) =<br />
p×q<br />
marginal<br />
revenue<br />
ΔTR/Δq<br />
(bu) ($) ($/bu)<br />
AR = P q TR MR<br />
23 5 115 23<br />
22 10 220 21<br />
21 15 315 19<br />
20 20 400 17<br />
19 25 475 15<br />
18 30 540 13<br />
17 35 595 11<br />
16 40 640 9<br />
15 45 675 7<br />
14 50 700 5<br />
13 55 715 3<br />
12 60 720 1<br />
11 65 715 -1<br />
10 70 700 -3<br />
9 75 675 -5<br />
8 80 640 -7<br />
7 85 595 -9<br />
6 90 540 -11<br />
5 95 475 -13<br />
4 100 400 -15<br />
3 105 315 -17<br />
elastic demand: TR rises as P falls.<br />
inelastic demand: TR<br />
falls as P falls.<br />
Chapter 12 − Markets with Power 12
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