Monopoly
- How do we define monopoly?
- How does a firm under monopolistic conditions differ from competitive firm?
- We say that the monopolistic firm has "market power," that is, the power to affect the equilibrium market price
- Geometrically, market power is illustrated with a downward sloping demand curve
- Conceptually and mathematically, the negative slope of the demand curve faced by a monopolist creates a gap between the demand curve itself (or the average revenue curve) and the marginal revenue curve. Why?