Pure Monopoly

INTRODUCTION

Today we will begin our study of monopoly. We will focus on pure monopoly today. You should read the text chapter identified below in the homework section, watch the related videos for help in understanding this material, do the activities identified, in the homework section and be prepared for the Problem of the Day. This page contains all the information you need for today's class. Use the table of contents on the right to help you navigate.

HOMEWORK

1. Read Mankiw (Chapter 15).

2. Watch these videos.

Khan Academy

• Monopoly basics

• Monopoly equilibrium (Part 1)

• Monopoly equilibrium (Part 2)

• Monopoly equilibrium (Part 3)

• Calculus proof of slope of marginal revenue and demand curves

• Review of revenue and cost graphs for monopoly

ASSESSMENTS AND ACTIVITIES

Problem of the Day: You will work cooperatively with your partner to construct a response to the following prompt.

• Assume the apple industry is perfectly competitive.

  1. Draw side-by-side graphs depicting the firm and industry in long-run equilibrium.

  2. Now assume that there is a decrease in demand in the apple market. Explain how this event affects each of the following in the short-run:

     • Price and quantity in both the industry and firm

     • The firm's profits

  3. Use your diagrams to explain the adjustment to long-run equilibrium in the long-run.

  4. Is this industry allocatively and productively efficient? Use both diagrams to explain your answer.

Lecture

• Demand and Marginal Revenue in Monopoly and Equilibrium in Monopoly

ENRICHMENT

Related Readings

• Monopoly