1st Slide: Basahin mo nakalagay

2nd Slide: In this illustration, the firm faces a downward-sloping demand curve, shown in the figure as D.
The downward slope of D indicates that the firm can sell more units of output only if the price of the
output falls. As you may recall from basic microeconomics, a marginal revenue curve corresponds to the
demand curve.

3rd Slide: Basahin mo nakalagay.

4th Slide: In this example, total revenue increased from $50,000 to $70,000, meaning revenue increase
by $20,000. At the same time, the quality sold increased from 100 to 120, meaning an increase of 20. So
revenue increased by $20,000 and quantity by 20. We, therefore, divide revenue which is $20, 000 by
quantity which is 20, to get $1,000. So, the MR achieved from each sale was $1,000.

5th Slide: If the curve is very flat, then the monopolist can sell an additional unit with only a small price
cut. As a result, he will not have to lower the price by very much on the units he would otherwise have
sold, so marginal revenue will be close to the price per unit. On the other hand, if the demand curve is
very steep, selling an additional unit will require a large price cut, implying that marginal revenue will be
much less than the price.

6th slide after the equation form: where Q is the number of units the firm sells, P is the price it charges
per unit, and A and B are constants.

6th Slide after the P-MR equals Q/B: Equation (8-2) reveals that the gap between price and marginal
revenue depends on the initial sales, Q, of the firm and the slope parameter, B, of its demand curve. If
sales quantity, Q, is higher, marginal revenue is lower, because the decrease in price required to sell a
greater quantity costs the firm more. In other words, the greater is B, the more sales fall for any given
increase in price and the closer the marginal revenue is to the price of the good. Equation (8-2) is crucial
for our analysis of the monopolistic competition model of trade in the upcoming section.

7th Slide: Basahin mo kung ano nakalagay.

8th slide: These numbers may look familiar, because they were used to construct Table 7-1 in Chapter 7.
(However, in this case, we assume a unit wage cost for the labor input, and that the technology now
applies to a firm instead of an industry.) The marginal and average cost curves for this specific numeric
example are plotted in Figure 8-2. Average cost approaches infinity at zero output and approaches
marginal cost at very large output.

9th Slide: In Figure 8-1, we can see that the price at which the profit-maximizing output QM is demanded
is PM, which is greater than average cost. When P 7 AC, the monopolist is earning some monopoly
profits, as indicated by the shaded box.2