compared to a competetive market result, a single price monopolist will: adopt marginal cost pricing strategy, which will decrease consumer surplus increase price, decrease consumer surplus, and increase producer surplus reduce output, create a deasweight loss, and decrease both producer and consumer surplus. Charge a price quial to marginal revenue, restrict output, and create a deadweight loss. Any ideas? I really don’t understand this one.
yes that’s right… can you explain why?
Please look at the picture in the book. Monopolist reduces output and causes allocative inefficiency.
the monopoly’s marginal cost curve is the market supply MR=MC but monopoly is said inefficient as P>MC so MB > MC --> deadweight loss
Lol… i see where i went wrong… I kept thinking they were talking about monopolistic competition, thanks anyawy