Microeconomics Unit 4

long run stay

long run leave

short run stay

short run leave

monopoly

price seeker

p=atc (bottom)

p=mc

the effect of selling MORE QUANTITY increases Total Revenue more than the loss of Total Revenue from lowering the price

the loss of total revenue from LOWERING THE PRICE exceeds the gain of revenue from selling more quantity

mc=mr

mr=0

prevents artificial restriction of supply, monopolies unless natural or regulated are illegal, prevents cartels

Allows the FTC and the Justice Department to break up any firm that has too much control of a market, Use of the Herfindahl-Hirschman Index allows for a test of market concentration to determine when it needs to be broken up

mr=mc

p= atc

p=mc