Microeconomics Chapter 15

Monopoly

How many firms does it take to compete?

How many firms does it take to compete?

One

Monopoly

Monopoly

Only SellerNo Close Substitutes

Barriers to Entry

Barriers to Entry

Government ProtectionKey Resource

Network ExternalitiesEconomies of Scale

Patents

Copyrights

Patents

Copyrights

20 Years

Lifetime plus 70 Years

Franchise

Franchise

Exclusive Legal Provider

New Drugs

New Drugs

10 Years of Testing before Approval

10 Years of Monopoly

Network Externalities

Network Externalities

The more who use it

The more valuable it becomes

Natural Monopoly

Natural Monopoly

One firm can supply entire market at a lower average cost than two or

more firms

Natural Monopoly

Natural Monopoly

The more I makethe lower my costs

Large Fixed Costs

Is competition always good?

Is competition always good?

Sometimes it can lead to higher prices

Monopoly Output and Price

Monopoly Output and Price

Lower Price:

Good: Sell More

Bad: Less Revenue Per Unit

Perfect Competition

Perfect Competition$

Quantity

P

Perfect Competition$

Quantity

Demand=MR

P

Perfect Competition

Marginal CostMC

$

Quantity

Demand=MR

P

Perfect Competition

Marginal CostMC

$

Quantity

Demand=MR

Q

P

Perfect Competition

Marginal CostMC

$

Quantity

Demand=MR

Q

P

Perfect Competition

Marginal CostMC

$

Quantity

Demand=MR

Total Revenue

Q

P

Perfect Competition

Marginal CostMC Average Cost

ATC

$

Quantity

Demand=MR

Total Revenue

Q

P

Perfect Competition

Marginal CostMC Average Cost

ATC

$

Quantity

Demand=MR

Total Revenue

Q

P

Perfect Competition

Marginal CostMC Average Cost

ATC

Total Cost

$

Quantity

Demand=MR

Q

P

Perfect Competition

Marginal CostMC Average Cost

ATC

Total Cost

$

Quantity

ProfitDemand=MR

Q

P

Perfect Competition

Marginal CostMC Average Cost

ATC

Total Cost

$

Quantity

ProfitDemand=MR

Q

P

Perfect Competition

Marginal CostMC Average Cost

ATC

Total Cost

$

Quantity

ProfitDemand=MR

Q

P

Perfect Competition

Marginal CostMC Average Cost

ATC

Total Cost

$

Quantity

ProfitDemand=MR

Q

P

Perfect Competition

Marginal CostMC Average Cost

ATC

Total Cost

$

Quantity

ProfitDemand=MR

Q

P

Perfect Competition

Marginal CostMC Average Cost

ATC

Total Cost

$

Quantity

ProfitDemand=MR

Q

P

Perfect Competition

Marginal CostMC Average Cost

ATC

Total Cost

$

Quantity

ProfitDemand=MR

Perfect Competition

Demand

Perfect Competition

Demand

MR

Perfect Competition

Demand MR=

Perfect Competition

Demand MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Perfect Competition Monopoly

Q D TR MR D TR MR

1

2

3

4

5

Monopoly: To get more Quantity must lower price

Perfect Competition Monopoly

Q D TR MR D TR MR

1

2

3

4

5

Monopoly: To get more Quantity must lower price

Perfect Competition Monopoly

Q D TR MR D TR MR

1

2

3

4

5

Monopoly: To get more Quantity must lower price

$3

$3

$3

$3

$3

Perfect Competition Monopoly

Q D TR MR D TR MR

1

2

3

4

5

Monopoly: To get more Quantity must lower price

$3

$3

$3

$3

$3

$3

$6

$9

$12

$15

Perfect Competition Monopoly

Q D TR MR D TR MR

1

2

3

4

5

Monopoly: To get more Quantity must lower price

$3

$3

$3

$3

$3

$3

$6

$9

$12

$15

$3

$3

$3

$3

$3

Perfect Competition Monopoly

Q D TR MR D TR MR

1

2

3

4

5

Monopoly: To get more Quantity must lower price

$3

$3

$3

$3

$3

$3

$6

$9

$12

$15

$3

$3

$3

$3

$3

$5

$4

$3

$2

$1

Perfect Competition Monopoly

Q D TR MR D TR MR

1

2

3

4

5

Monopoly: To get more Quantity must lower price

$3

$3

$3

$3

$3

$3

$6

$9

$12

$15

$3

$3

$3

$3

$3

$5

$4

$3

$2

$1

$5

$8

$9

$8

$5

Perfect Competition Monopoly

Q D TR MR D TR MR

1

2

3

4

5

Monopoly: To get more Quantity must lower price

$3

$3

$3

$3

$3

$3

$6

$9

$12

$15

$3

$3

$3

$3

$3

$5

$4

$3

$2

$1

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Demand

Perfect Competition

Demand MR=

Perfect Competition

Demand

MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Demand

MR

Monopoly

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

Qty

Lose Gain

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5 1

Qty

Lose Gain

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5 1

Qty

$5

Lose Gain

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5 1

Qty

$5 $5

Lose Gain

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$4

1

2

Qty

$5 $5

Lose Gain

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$4

1

2

Qty

$5

$8

$5

Lose Gain

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$4

1

2

Qty

$5

$8

$5

$3

Lose Gain

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$4

1

2

Qty

$5

$8

$5

$3

Lose Gain

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$4

1

2

Qty

$5

$8

$5

$3

Lose Gain

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$4

1

2

Qty

$5

$8

$5

$3

Lose

Lose

-$1

Gain

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$4

1

2

Qty

$5

$8

$5

$3

LoseG

ain

Lose

-$1

Gain

$4

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$4

1

2

Qty

$5

$8

$5

$3

LoseG

ain

Lose

-$1

Gain

$4

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$4

1

2

Qty

$5

$8

$5

$3

LoseG

ain

Lose

-$1

Gain

$4

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$4

1

2

Qty

$5

$8

$5

$3

Lose

-$1

Gain

$4

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

1

3

2

Qty

$5

$8

$5

$3

Lose

-$1

Gain

$4

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

1

3

2

Qty

$5

$8

$9

$5

$3

Lose

-$1

Gain

$4

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

1

3

2

Qty

$5

$8

$9

$5

$3

$1

Lose

-$1

Gain

$4

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

1

3

2

Qty

$5

$8

$9

$5

$3

$1

Lose

-$2

-$1

Gain

$4

Lose

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

1

3

2

Qty

$5

$8

$9

$5

$3

$1

Lose

-$2

-$1

Gain

$3

$4

LoseG

ain

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

1

3

2

Qty

$5

$8

$9

$5

$3

$1

Lose

-$2

-$1

Gain

$3

$4

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

1

3

2

4

Qty

$5

$8

$9

$5

$3

$1

Lose

-$2

-$1

Gain

$3

$4

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

1

3

2

4

Qty

$5

$8

$9

$8

$5

$3

$1

Lose

-$2

-$1

Gain

$3

$4

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

1

3

2

4

Qty

$5

$8

$9

$8

$5

$3

$1

-$1

Lose

-$2

-$1

Gain

$3

$4

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

1

3

2

4

Qty

$5

$8

$9

$8

$5

$3

$1

-$1

Lose

-$2

-$1

-$3

Gain

$3

$4

Lose

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

1

3

2

4

Qty

$5

$8

$9

$8

$5

$3

$1

-$1

Lose

-$2

-$1

-$3

Gain

$3

$4

$2

LoseG

ain Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

1

3

2

4

Qty

$5

$8

$9

$8

$5

$3

$1

-$1

Lose

-$2

-$1

-$3

Gain

$3

$4

$2

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$3

$1

-$1

Lose

-$2

-$1

-$3

Gain

$3

$4

$2

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

Lose

-$2

-$1

-$3

Gain

$3

$4

$2

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

Gain

$3

$4

$2

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

Lose Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

LoseG

ain Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Marginal Revenue MR

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Marginal Revenue MR

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Marginal Revenue MR

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Marginal Revenue MR

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Marginal Revenue MR

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Marginal Revenue MR

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Marginal Revenue MR

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Marginal Revenue MR

Monopoly

Price

1 3

$5

$3

$4

$2

$1

$02 4 5

Price Qty TR MR

$5

$3

$4

$2

$1

1

3

2

4

5

Qty

$5

$8

$9

$8

$5

$5

$3

$1

-$1

-$3

Lose

-$2

-$1

-$3

-$4

Gain

$3

$4

$2

$1

Demand

Marginal Revenue MR

Monopoly$

Q

Monopoly$

Q

Demand

Marginal Revenue MR

Monopoly$

Q

Demand

Marginal CostMC

Marginal Revenue MR

Monopoly$

Q

Demand

Marginal CostMC

Marginal Revenue MR

Monopoly$

Q

Demand

1. MR=MC?

Marginal CostMC

Marginal Revenue MR

Monopoly$

Q

Demand

1. MR=MC?

Marginal CostMC

Q

Marginal Revenue MR

Monopoly$

Q

Demand

1. MR=MC?

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly$

Q

Demand

1. MR=MC?

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly$

Q

Demand

1. MR=MC?2. TR= P x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

$

Q

Demand

1. MR=MC?2. TR= P x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

$

Q

Demand

1. MR=MC?2. TR= P x Q3. TC=ATC x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

$

Q

Demand

1. MR=MC?2. TR= P x Q3. TC=ATC x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

$

Q

Demand

1. MR=MC?2. TR= P x Q3. TC=ATC x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

$

Q

Demand

1. MR=MC?2. TR= P x Q3. TC=ATC x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

Cost

$

Q

Demand

1. MR=MC?2. TR= P x Q3. TC=ATC x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

Cost

$

Q

Demand

1. MR=MC?2. TR= P x Q3. TC=ATC x Q4. Profit =TR-TCor (P-ATC) x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

Cost

$

Q

Demand

1. MR=MC?2. TR= P x Q3. TC=ATC x Q4. Profit =TR-TCor (P-ATC) x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

Cost

$

Q

Profit

Demand

1. MR=MC?2. TR= P x Q3. TC=ATC x Q4. Profit =TR-TCor (P-ATC) x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

Cost

$

Q

Profit

Demand

1. MR=MC?2. TR= P x Q3. TC=ATC x Q4. Profit =TR-TCor (P-ATC) x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

Cost

$

Q

Profit

Demand

Consumer Surplus

1. MR=MC?2. TR= P x Q3. TC=ATC x Q4. Profit =TR-TCor (P-ATC) x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

Cost

$

Q

Profit

Demand

Consumer Surplus

1. MR=MC?2. TR= P x Q3. TC=ATC x Q4. Profit =TR-TCor (P-ATC) x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

Cost

$

Q

Profit

Demand

Deadweight Loss

Consumer Surplus

1. MR=MC?2. TR= P x Q3. TC=ATC x Q4. Profit =TR-TCor (P-ATC) x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

Cost

$

Q

Profit

Demand

Deadweight Loss

Consumer Surplus

1. MR=MC?2. TR= P x Q3. TC=ATC x Q4. Profit =TR-TCor (P-ATC) x Q

Marginal CostMC

Q

P

Marginal Revenue MR

Monopoly

Average CostATC

Cost

$

Q

Profit

Demand

Deadweight Loss

Consumer Surplus

1. MR=MC?2. TR= P x Q3. TC=ATC x Q4. Profit =TR-TCor (P-ATC) x Q

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

D

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

D

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

D

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

D

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

D

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

D

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

D

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

Gain

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

Gain

Loss

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

Loss

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

Loss

Loss

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

Loss

Loss

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

0 1 2 3 4 5 6 7 8 9 10

Quantity

MC

DMR

Loss

Loss

PriceDiscrimination

PriceDiscrimination

Selling the same good to different customers at

different prices