4. How is this different from Perfect Competition? Monopoly is different from perfect competition, in ways...

4. How is this different from Perfect Competition? Monopoly is different from perfect competition, in ways that:
A. Monopoly has one firm that is price maker, but in perfect competition has many firms with free entry and exit and firms are price takers.
B. Monopoly earns positive economic profit in long run, but perfectly competitive firm earns zero economic profit in the long run.
C. Perfect competition achieves productive & allocative efficiency, but monopoly firm is inefficient.

5. Draw three graphs of a monopoly, one in each of the three situations, a, b, and c and demonstrate how you would choose a price and quantity and discuss what the monopolist would do in each situation.

6. What happens in the long-run to the monopolist in each situation and what does this say about efficiency in monopoly markets?

Expert Solution

Rahul Sunny answered 1 year ago

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