1. Are Monopolies Desirable?

2. Review Efficiency Competitive Firms and Efficiency
1. allocative efficiency: P = MC 2. productive efficiency: P = MC = ATC

3. Allocative Efficiency
Occurs when there is an optimal distribution of goods and services. This occurs at a socially optimum price.
An output level where the price equals the Marginal Cost (MC) of production.
The price that consumer's are willing to pay is equivalent to the marginal utility that they get.
Optimal distribution is achieved when the marginal utility of the good equals the marginal cost.
Firms in Perfect competition are said to produce at an allocatively efficient level
Monopoly sets a price of Pm. This is allocatively inefficient because Price is greater than MC.
Allocative efficiency would occur at the point where the MC cuts the Demand curve so Price = MC. 

4. Monopolies Are…. allocative inefficiency: P >MC
a) underallocation of resources smaller output than competitive markets b) higher prices than competitive markets
2. productive inefficiency
a) not producing at minimum ATC b) cost complications like natural monopolies due to economies of scale – one firm can produce at a lower cost than others

5. How would I know if this website is reliable?
How would I know if this website is reliable?
What is a reasonable level of profits for a monopoly to make?
Should all monopolies be regulated?
Why can monopolies practice price discrimination?

6. Image From http://www. harpercollege

7. Pricing and Monopolies
At a fair return price there are normal profits being made
Be Aware of where the ATC is when measuring monopoly profit!
Price discrimination occurs when different buyers are charged different prices without a connection to costs

8. A Monopoly’s impact on consumer surplus and deadweight loss.
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9. Can a Monopoly experience loss?
ABSOLUTELY! Image from