AREC 384 imperfect competition: monopolies
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monopolist charges a price that is _________
greater than marginal cost
what are the social costs of monopolist pricing behavior?
- reduced consumer surplus
- deadweight loss
- price regulation
illustrate reduced consumer surplus
- producer side: inefficient use of resources
- inability of willing consumers to enter the market who would have under perfect competition
- rent: any money a firm gets that is more than MC
- when you actively engage in activities that produce more rent (lobbying, advertisements)
- costly activities to society? time spent on bills that benefit a few firms, etc.
need gov't bodies to prevent abuse of market power
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