Activity – Monopoly Markets
Monopoly Markets
It has been argued that a monopoly does not produce a socially optimal output.
Watch the following video:
- https://www.youtube.com/watch?v=daxL1ZLrUzg (5.56 minutes)
After watching the following video attend the class and:
- Given the demand function as well as the cost function of the monopolist, calculate the profit maximizing price and quantity combination for the firm.
- Explain how marginal revenue of a monopolist is different from that of a perfectly competitive firm.
- Demonstrate monopolist’s above the marginal cost pricing.
- Given the average total cost of the monopolist, determine whether the firm is making a profit, loss, or is at break even.
- Discuss the concept of deadweight loss and non-socially optimum output for a monopoly firm.