This preview shows page 1. Sign up to view the full content.
Unformatted text preview: producers would have Q PC *, at a higher quantity and lower price. Perfect Competition: Monopoly: - many sellers of the same product - one seller of the good/service - the price charged in a monopolistic industry is higher than in a PC industry - output is constrained with a monopoly so: Q PC * > Q M * - no barriers to entry or exit prevents profits - barriers allow for long run profits in the from existing in the long run long run - outcome is believed to be efficient because - dead weight loss (social loss) exists produce with least cost method because monopolist has the power to constrain output and hence raise price - each firm is a price taker (P = MC) -firms are price makers (P > MC) B MC D = p MR Q P P M * P PC * Q M * Q PC * ATC* C A P P P Q q Q S D MC MR = P ATC MC MR D ATC ATC...
View Full Document
This note was uploaded on 12/13/2010 for the course ECON 201 taught by Professor Egger during the Fall '06 term at Towson.
- Fall '06