Professional Documents
Culture Documents
Monopoly
Chapter 12
Introduction
Price MC
Monopolist
$36 price
30
24
18
12
6 D
0
6 1 2 3 4 5 6 7 8 9 10
12 MR
Comparing Monopoly and Perfect
Competition
• Equilibrium output for the monopolist,
like equilibrium output for the
competitor in a perfectly competitive
market is MC = MR.
Comparing Monopoly and Perfect
Competition
• Because the monopolist’s marginal
revenue is below its price, its equilibrium
output is less than, and price is higher
than, for a competitive market.
Comparing Monopoly and Perfect
Competition
Price MC
Monopolist
$36 price
30
24 Competitive price
18
12
6 D
0
6 1 2 3 4 5 6 7 8 9 10
12 MR
Profits and Monopoly
Price MC
ATC
PM A
Profit
CM B
MR D
0 QM Quantity
A Monopolist Breaking Even
• A monopolist can break even.
A Monopolist Breaking Even
Price MC
ATC
PM
MR D
0 QM Quantity
A Monopolist Making a Loss
• A monopolist can make a loss.
A Monopolist Making a Loss
Price MC ATC
CM B
Loss A
PM
MR D
0 QM Quantity
The Price-Discriminating Monopolist
Price
MC
PM
C D
PC
B
A
MR D
0 QM QC Quantity
The Welfare Loss from Monopoly