<p>Chapter 9: Monopoly</p><p>LEARNING OBJECTIVES</p><p>#1 - Graphically express the monopolist’s demand curve and marginal revenue curve. And you will understand how a monopolist maximizes profit by setting MR = MC.</p><p>Step 1 Read the sections in your textbook titled “The Monopoly Market Structure” and “Price and Output Decisions for a Monopolist.”</p><p>*Step 2 Watch the Graphing Workshop “See It!” tutorial titled “Monopoly: Demand and Marginal Revenue.” Study graphs showing how a firm maximizes profit.</p><p>*Step 3 Watch the Graphing Workshop “See It!” tutorial titled “Output Determination in Monopoly.” Study graphs showing how monopoly maximizes profit.</p><p>Step 4 Read the Graphing Workshop “Grasp It! exercise titled “Monopoly, Demand and Marginal Revenue.” This exercise uses a slider bar to demonstrate the relationship between the demand curve, marginal revenue curve, and total revenue.</p><p>Step 5 Read the Graphing Workshop “Grasp It!” exercise titled “Output Determination in Monopoly.” This exercise uses a slider bar to compute different profits for a monopolist that charges different prices.</p><p>Step 6 Create a new graph at the Graphing Workshop “Try It!” exercise titled “Monopoly: Demanded and Marginal Revenue.” This exercise uses the market for gasoline to show that total revenue is maximum were marginal revenue equals zero.</p><p>Step 7 Create a new graph at the Graphing Workshop “Try It!” exercise titled “Output Determination in Monopoly.” This exercise shows the demand (D) and marginal revenue (MR) curves facing a monopolist, as well as the firm’s average total cost (ATC), average variable cost (AVC), and marginal cost (MC) curves to determine the profit- maximizing price and rate of output for a monopolist.</p><p>Step 8 Play the “Causation Chains Game” titled “Profit Maximization and Loss Minimization.” </p><p>The Result By following these steps, you have learned that a monopolist does not operate where total revenue equals its maximum and marginal revenue equals zero. Instead, the monopolist sets its price and quantity where MR = MC to maximize profits.</p><p>#2 - Explain why a monopolist may practice price discrimination.</p><p>Step 1 Read the section in your textbook titled “Price Discrimination.”</p><p>Step 2 Watch the Graphing Workshop “See It!” exercise titled “Price Discrimination.” Study price discrimination in the market for airline tickets.</p><p>Step 3 Read the Graphing Workshop “Grasp It!” exercise titled “Price Discrimination.” This exercise uses a slider bar to demonstrate a monopolist can maximize profit by charging a lower price to more price sensitive customers.</p><p>Step 4 Work the Graphing Workshop “Try It!” exercise titled “Price Discrimination.” This exercise illustrates the situation facing a monopoly supplier of a new method of cosmetic surgery.</p><p>Ch9-1 Step 5 Read the EconNews article titled “Drug Discrimination.” This article describes how conditions exist that allow companies to charge different prices for the same drug in Canada and the United States.</p><p>The Result Following these steps, you have learned that, under certain conditions, a monopolist may be able to maximize profits by changing different prices for the same product to different groups of customers.</p><p>#3 - Distinguish between monopoly and perfect competition.</p><p>Step 1 Read the sections in your textbook titled “Comparing Monopoly and Perfect Competition,” “The Case against and for Monopoly,” and the You’re the Economist titled “New York Taxicabs: Where Have all the Flags Gone?” </p><p>Step 2 Read the EconNews article titled “European Airlines: Too Many For Their Own Good?” This article describes a European airline monopoly for comparison to the perfectly competitive model.</p><p>Step 3 Read the EconNews article titled “Not Only Can’t You Find a Taxi in New York: Now You’ll Have to Pay Even More to Not Find One.” This article describes the history of the tax monopoly in New York City.</p><p>The Result By following these steps, you have learned that both a monopolist and a perfectly competitive firm produce an output where MR = MC. If the market demand curve and costs were the same, the monopolist would charge a higher price and produce a lower output, which would be inefficient. </p><p>Ch9-2</p>