This document discusses monopolies and barriers to entry, revenues and costs, profit maximization versus revenue maximization, efficiency, advantages, economies of scale, research and development investments, and comparisons to perfect competition. It concludes that a monopoly is productively and allocatively inefficient as it can charge higher prices, produce lower output, and exercise anti-competitive behavior.

2. Monopoly

3. Assumptions

4. Barriers to entry

5. Barriers to entry

6. Barriers to entry

7. Natural Monopoly
LRAC

8. Barriers to entry

9. Barriers to entry

10. Barriers to entry

11. Barriers to entry

12. Demand Curve in Monopoly

13. Profits in monopoly

14. Loss in monopoly

15. Revenue maximization in Monopoly
Instead of Profit maximization (MC=MR), a
monopolist may choose revenue maximization
(MR=0).
Revenue: Output (quantity) x cost of each
output
Profit: Total revenue- total costs
Profit maximization: Profit maximization occurs
when MC = MR (Marginal cost = marginal
revenue)
Revenue maximization: Revenue maximization
occurs when MR=0 (Marginal revenue = 0)

16. Efficiency in Monopoly

17. Advantages of Monopoly
Advantages
of Monopoly
Economies Investment
of scale in R & D

18. Economies of scale

19. Investment in R & D

20. Comparison of price and output in monopoly and
perfect competition

21. Conclusion
Productively Charge higher
Exercise anti-
A monopoly and prices and
competitive
is: allocatively produce
behaviour.
inefficient. lower output.