Activity – Monopoly Markets

Monopoly Markets

It has been argued that a monopoly does not produce a socially optimal output.

Watch the following video:

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.

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