1. KRUGMAN'S MICROECONOMICS for AP* Introduction to Monopoly Margaret Ray and David Anderson Micro: Econ: 25 61 Module

2. What you will learn in this Module : How a monopolist determines the profit- maximizing price. How to determine whether a monopoly is earning a profit or a loss. How the monopoly outcome is different from the long-run outcome in perfect competition.

3. Monopoly Demand and MR A Monopolist’s MR curve is below the D curve because the monopoly must lower price to sell more.

4. Profit-maximizing P and Q A monopoly maximizes profit by producing the output level where MC = MR (like every firm does!)

5. Monopoly versus Perfect Competition Monopolies create inefficiency P > MC D Output MR Qm= 3 Pc = $10 Pm = $14 $ MC = ATC Profit = $12

6. The “Classic” Monopoly Graph

7. Figure 61.1 Comparing the Demand Curves of a Perfectly Competitive Producer and a Monopolist Ray and Anderson: Krugman’s Economics for AP, First Edition Copyright © 2011 by Worth Publishers

8. Table 61.1 Demand, Total Revenue, and Marginal Revenue for the De Beers Diamond Monopoly Ray and Anderson: Krugman’s Economics for AP, First Edition Copyright © 2011 by Worth Publishers

9. Figure 61.2 A Monopolist’s Demand, Total Revenue, and Marginal Revenue Curves Ray and Anderson: Krugman’s Economics for AP, First Edition Copyright © 2011 by Worth Publishers

10. Figure 61.3 The Monopolist’s Profit-Maximizing Output and Price Ray and Anderson: Krugman’s Economics for AP, First Edition Copyright © 2011 by Worth Publishers

11. Figure 61.4 The Monopolist’s Profit Ray and Anderson: Krugman’s Economics for AP, First Edition Copyright © 2011 by Worth Publishers