The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-A price discriminating monopolist charges a very high price to the consumers with high price elasticity of demand.
Definitions:
Game Theory
The study of behavior in situations of interdependence. Used to explain the behavior of an oligopoly.
Dominant Strategies
In game theory, strategies that are best for a player, regardless of the strategies chosen by other players.
Payoff Matrix
In game theory, a diagram that shows how the payoffs to each of the participants in a two-player game depend on the actions of both; a tool in analyzing interdependence.
Dominant Strategy
In game theory, an action that is a player’s best action regardless of the action taken by the other player.
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