Learning objectives
Compare market structures by number of firms, product differentiation, barriers to entry and control over price, and explain why a price-making firm's marginal revenue lies below its demand curve
Describe the sources of monopoly power, including economies of scale (natural monopoly), legal barriers and control of a key resource
Draw the monopoly diagram, find output where MR = MC, read the price from the demand curve and identify profit or loss
Explain why a monopoly is allocatively inefficient (P > MC), identify its deadweight loss and explain why a single-price monopoly never produces on the inelastic portion of its demand curve
Explain the conditions needed for price discrimination and analyze how perfect price discrimination changes output, consumer surplus, profit and deadweight loss
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