| Abstract: | The model developed in this paper attempts to improve upon three weaknesses of the traditional marginal analysis pf the monopoly firm. A dynamic model is developed to overcome the limitations of describing a dynamic world with a static model. A static model can only indicate the direction of change of a dynamic system. Because of the limitations of a static model, the transition from short-run equilibrium to long-run equilibrium cannot be explained. The solution of the dynamic model traces the firm's optimal path through time. ... |
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