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how is a monopoly different from a competitive market
price > MC (monopoly), Price=MC (competition)
marginal value to society of extra units exceeds the marginal cost of producing the extra units
Demand curve is not perfectly elastic, demand = average revenue curve
marginal revenue lies below the average revenue (demand)
what creates more output, monopoly or competitive market?
competitive market
monopoly’s profit maximizing decision (mc<p) to restrict output below the competitve level creates a loss of surplus (deadweight loss)
MONOPOLY CREATES MARKET INEFFICIENCY
Cartel
association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition
cartels have an incentive to cheat
what happens when all firms cheat (cartels)
the price falls back towards the competitive level
joint profits are not maximized
cartels must prevent entry of new users
how do monopolies maintain their profits ?
entry barriers
are monopolies price takers or pricemaker?
price maker
Note 
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