MyEconLab Concept Video
To understand how a single-price monopoly makes its output and price decisions, we must first study the link between price and marginal revenue.
Because in a monopoly there is only one firm, the demand for the firm’s output is the market demand. Let’s look at Bobbie’s Barbershop, the sole supplier of haircuts in Cairo, Nebraska. The table in Figure 16.2 shows the demand schedule for Bobbie’s haircuts. For example, at $12, consumers demand 4 haircuts an hour (row E).