ECONOMICS CHAPTER 8

• Less than the most efficient size of plant

  the condition when the monopolist's market is so limited that the marginal revenue curve cuts the long-run average cost curve to the left of its minimum point.
• Most efficient size of plant

  the condition when the monopolist’s cost curves are such that the marginal revenue curve hits the minimum point of the long-run average cost curve.
• Price discrimination

  happens when a monopolist separates two markets and charges different prices for the product in each of the markets.
• Pure monopoly

  a market organization in which there is a single firm producing a commodity or a service for which there are no close substitutes.
• Monopoly is virtually non-existent in basic manufacturing industries but is fairly common
• In a purely competitive market, the firm faces a perfectly elastic demand schedule. The firm can sell as much as little as it wants at the going market price. The competitive firm is a “price taker.”
•  the monopolist is faced with the following questions:

  1. At what point would I be losing?
  2. At what point would I break even?
  3. At what point would I maximize profit?