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Essay / Research Paper Abstract
This 9 page paper answers a set of questions regarding the economic position of a monopoly. The question looks at the way profit is achieved in a monopoly and shows the way marginal cost, demand and quantity supply can be shown on a graph to determine the level of profit. The second question looks at the difference in output of a monopoly and a competitive environment along the concept of the deadweight loss. The third question considers the potential of discriminatory pricing from a monopoly and the last questions looks at who would win and who would loose from discriminatory pricing. Questions are all illustrated with relevant graphs. The bibliography cites 3 sources.
Page Count:
9 pages (~225 words per page)
File: TS14_TEmonoprof.doc
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Unformatted sample text from the term paper:
This gives then firm a high level of control over the price and as such over the profit which is created. When looking at the level of profit which is
made by the firm it is possible to consider this as the result of the price set by the firm and quantity that they wish to supply. To show
this in a graph it is important to understand how the costs are incurred. There are two types of cost; fixed costs and marginal costs. The fixed costs for a
firm will remain the same whatever the level of production. So the cost per unit will decrease as the production increases and the same cost is decided between more units,
in this case telephone lines supplied. The marginal cost is the additional cost of providing each extra unit. In this case it is assumed that the marginal cost remains uniform,
so that each individual additional unit will cost the same to supply at any quantity point. Fixed costs are not shown in the graph; these are usually omitted from
these graphs (Nellis and Parker, 2006). The marginal cost is shown with the line MC. However, to look at the potential profit that the firm will make it is necessary
to look at the average total cost. The average total cost is the fixed and the marginal cost per unit added together (Nellis and Parker, 2006). As the fixed costs
remain the same overall and reduce per unit and the margin cost remains the same per unit this can be seen as a downward sloping line, and is marked ATC
(Nellis and Parker, 2006). Next we need to look at the demand. This is the same line that is seen in usual supply and demand graphs. As the price decreased
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