Pages in this set

Page 1

Preview of page 1
James




MARKET STRUCTURE ­ EVALUATING PERFECT
COMPETITION AND MONOPOLY
PROFIT MAXIMISATION ­ PERFECT COMPETITION & MONOPOLY

A perfectly competitive market is productively efficient, because it is
trying to produce at the lowest cost ­ hence this is a true at the
bottom of the AC curve. The profit maximising rule…

Page 2

Preview of page 2
James




Consumer Surplus: The difference between the value to buyers of a level of consumption of a
good, and the amount that buyers actually pay for that amount.

Perfect Competition (good) Monopoly (bad)

Allocative Efficiency Allocative Efficiency
P=MC. A firm must produce what Monopolies have an incentive to cut
consumers…

Page 3

Preview of page 3
James




Conditions: (1) Monopolist faces different demand curves from separate buyers. (2) The
monopolist must be able to split the market into distinct groups of buyers. (3) The monopolist
must be able to keep the markets separate at a relatively low cost.
PERFECT COMPETITION VS MONOPOLY:




Page 3

Comments

davidsalter

Report

This is an excellent 2 page summary comparing monopoly and perfect competition. It is well laid out.

Similar Economics resources:

See all Economics resources »See all resources »